Benchmarks ended in the green on Friday buoyed by a rally in telecommunication and bank stocks even as investors digested another missile launch over Japan by North Korea. The S&P 500 breezed past 2500 for the first time following a rally in the financial and technology stocks. The Dow ended in the positive territory, marking its sixth consecutive session of gains. The Nasdaq also closed higher boosted by a rally in semiconductor stocks. Meanwhile, U.S. retail sales for August slumped for the second time in three months.
The Dow Jones Industrial Average (DJIA) closed at 22,268.34, gaining 0.3%. The S&P 500 Index (INX) increased 0.2% to close at 2,500.23. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,448.47, increasing 0.3%. A total of 8.5 billion shares were traded on Friday, higher than the last 20-session average of 5.9 billion shares. Advancing issues outnumbered decliners on the NYSE by 1,592 to 1,190. On the Nasdaq, advancers outnumbered decliners by 1,611 to 1,189. The CBOE VIX decreased almost 2% to close at 90.63.
Dow and S&P 500 Hit Records
Markets closed higher on Friday due to a rally in shares of telecom and bank stocks. Shares of Nvidia Corp. (NVDA - Free Report) increased 6.3% following Evercore ISI raising its price target on the company to $250 from $180. This pushed the telecom shares up. The iShares PHLX Semiconductor ETF (SOXX) increased 1.8% for the fifth straight day — its biggest weekly gain since July. The broader Technology Select Sector SPDR ETF (XLK) increased 0.4%.
Moreover, the bank shares surged following strong inflation numbers which came in above the expectations and also increased the speculations of another rate hike by the Fed. The SPDR S&P Bank ETF (KBE) advanced 0.5%, while the broader Financial Select Sector SPDR ETF (XLF) increased 0.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Retail Sales Slump
The retail sales in the United States dipped for the second time in the last three months. Economists believe that Americans were disinclined to spend on luxury goods such as cars and also consumer goods like clothes and electronics.
Retail sales dropped 0.2% in August — the biggest decline in six months. Sales for the U.S. auto industry, which accounts for about 20% of the total retail sales, tanked 1.6% in August. This weighed heavily on the overall retail sales for the month. Reports also stated that if auto sales are excluded, the retail sales data actually increased 0.2% albeit only due to high gasoline prices, which increased in the wake of Hurricane Harvey.
Economists believe that weak retail sales figures would not have much of an impact on the U.S. economy. They reasoned that the unemployment rate at 4.3% is at its lowest level since 2001. Moreover, the U.S. economy has expanded continuously for the past eight years. Such robust economic conditions outshine the overall effect of weak retail sales.
Business Inventories for the month of July increased 0.2% from the month of June, coming in line with the consensus estimate. Further, the U.S. industrial output declined 0.9% in August, marking its first dip in about seven months. The officials from the Federal Reserve commented that such a decline was due to the impact of Hurricane Harvey. The NY Empire State Index came in at 24.4 for September, down from 25.2 in August.
For the week, the Dow, the S&P 500 and the Nasdaq increased 2.2%, 1.6% and 1.4% respectively. Investors’ sentiment improved after the impact of Hurricane Irma was weaker than expected. The Dow also posted its biggest one-day percentage gain since Mar 1, with shares of Travelers contributing the most toward its gains. Speaking at an investment conference, U.S. Treasury of Secretary stated that the Trump administration expects tax reforms to materialize by the year end. In the latest of a series of threats, North Korea threatened to raze both Japan and the United States with nuclear weapons after the U.N. issued fresh sanctions against the country.
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