Major Averages Close Mixed Following Yellen Speech - U.S. Commentary

(RTTNews) - After failing to sustain an early move to the upside, stocks turned mixed over the course of the trading session on Friday. While the Dow and the S&P 500 remained in positive territory, the tech-heavy Nasdaq pulled back into the red.

The Nasdaq edged down 5.68 points or 0.1 percent to 6,265.64, while the Dow inched up 30.27 points or 0.1 percent to 21,813.67 and the S&P 500 ticked up 4.08 points or 0.2 percent to 2,443.05.

Despite the mixed performance on the day, the major averages moved higher for the week due largely to the rally on Tuesday. The Dow rose by 0.6 percent, while the Nasdaq and the S&P 500 climbed by 0.8 percent and 0.7 percent, respectively.

The early strength on Wall Street was partly due to optimism about tax reform following comments from President Donald Trump's chief economic adviser Gary Cohn.

In an interview with the Financial Times, Cohn said Trump plans to launch a public campaign to highlight the need for tax reform next week.

"Starting next week, the president's agenda and calendar is going to revolve around tax reform," Cohn said. "He will start being on the road making major addresses justifying the reasoning for tax reform and why we need it in the U.S."

Cohn indicated Trump will begin the push with a speech in Missouri, which officials told the FT is planned for next Wednesday.

Meanwhile, traders were also reacting to Federal Reserve Chair Janet Yellen's remarks at the Fed's economic policy symposium in Jackson Hole, Wyoming.

Yellen refrained from discussing monetary policy in her prepared remarks, focusing on the topic of financial stability a decade after the onset of the financial crisis.

"The events of the crisis demanded action, needed reforms were implemented, and these reforms have made the system safer," Yellen said.

Yellen said core reforms enacted after the 2008 financial crisis have boosted financial resilience without limiting credit or growth.

"Yellen had nothing to say today about the outlook for monetary policy," said Paul Ashworth, Chief U.S. Economist at Capital Economics. "With economic growth and the labor market looking good, we still think that the Fed will hike interest rates again in December."

He added, "But that forecast assumes Congress manages to raise the debt ceiling without too much disruption and is making progress on a modest package of tax cuts."

European Central Bank President Mario Draghi also spoke at the symposium, saying the global economic recovery is "firming up."

On the U.S. economic front, the Commerce Department released a report showing a sharp pullback in durable goods orders in the month of July.

The Commerce Department said durable goods orders plunged by 6.8 percent in July after surging up by 6.4 percent in June. Economists had expected durable goods orders to slump by 6.0 percent.

Excluding a steep drop in orders for transportation equipment, durable goods orders increased by 0.5 percent in July after inching up by 0.1 in June. Ex-transportation orders had been expected to rise by 0.4 percent.

Sector News

Airline stocks moved substantially higher on the day after falling sharply in recent sessions. After ending Thursday's trading at its lowest closing level in over nine months, the NYSE Arca Airline Index surged up by 3.2 percent.

SkyWest (SKYW), American Airlines (AAL), and Southwest (LUV) turned in some of the airline sector's best performances.

Considerable strength was also visible among electronic storage stocks, as reflected by the 2.6 percent jump by the NYSE Arca Disk Drive Index. Pure Storage (PSTG) posted a standout gain after reporting a narrower than expected second quarter loss on better than expected revenues.

Trucking stocks also showed a significant move to the upside, driving the Dow Jones Trucking Index up by 2.2 percent. The index reached its best closing level in over a month.

Oil service stocks also saw notable strength amid an increase by the price of crude oil, while some weakness was visible among internet stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index climbed by 0.5 percent, while Hong Kong's Hang Seng Index jumped by 1.2 percent.

Meanwhile, the major European markets moved modestly lower over the course of the session. While the French CAC 40 Index slipped by 0.2 percent, the U.K.'s FTSE 100 and the German DAX Index both edged down by 0.1 percent.

In the bond market, treasuries turned higher over the course of the session after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.5 basis points to a two-month closing low of 2.169 percent.

Looking Ahead

Economic data is likely to attract attention next week, with the closely watched monthly jobs report due to be released next Friday.

Reports on consumer confidence, personal income and spending, pending home sales, and manufacturing activity may also attract attention.

On the earnings front, Best Buy (BBY), H&R Block (HRB), Ciena (CIEN), and Dollar General (DG) are among the companies due to report their quarterly results next week.