Markets ended higher on Friday following better than expected readings for industrial output which hit its highest level in the last four months. However, all the major benchmarks posted weekly declines on Friday. Investors braced for higher volatility due to Friday being a quadruple-witching day. Meanwhile, news surfaced that Trump will soon fire his national security advisor H.R. McMaster.
The Dow Jones Industrial Average (DJI) increased 0.3% to close at 24,946.51. The S&P 500 gained 0.2% to close at 2,752.01. The tech-laden Nasdaq Composite Index closed at 7,481.99, increasing 0.2%. The fear-gauge CBOE Volatility Index (VIX) increased 0.6% to close at 16.69. A total of 9.54 billion shares were traded on Friday, considerably higher than the last 20-session average of 7.25 billion shares. Advancers outnumbered decliners on the NYSE by a 2.01-to-1 ratio. On Nasdaq, a 1.48-to-1 ratio favored advancing issues.
U.S. Industrial Production Hits 4-Month High
Per the latest report from Federal Reserve, industrial production in the United States surged 1.1% in February, comfortably surpassing the consensus estimate of 0.3% for the period. This marked its highest reading since October 2017.
Such a feat was achieved on the back of renewed strength in manufacturing, construction and energy sectors. The gains also offset a slump in utility output. Manufacturing output rose 1.2% last month, its highest increase since October. Further, strength in oil and gas extraction boosted mining output by 4.3%.
Utility output declined 4.7% due to temperatures becoming warmer than usual. Meanwhile, auto-production gained 3.9% and the output of construction equipment increased 2.3%. Such factors were also pivotal in boosting overall industrial production in the last month. Release of the industrial output data boosted broad based gains for the overall market on Friday.
How Did the Benchmarks Perform?
The Dow amassed almost 73 points to end the session in positive territory. Gains for the blue-chip index were buoyed by an increase in shares of Walmart (WMT - Free Report) and Home Depot, Inc. (HD - Free Report) , which gained 1.9% and 0.5%, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 added almost 5 points to also finish in the green. Gains for the broader index were rather broad-based. Of the 11 segments of the S&P 500, nine ended in the positive territory, with energy shares leading the advancers. The Energy Select Sector SPDR ETF (XLE) surged almost 1% on Friday. Meanwhile, the Nasdaq added 0.25 point to close in the green on the back of broad-based gains.
The day was also the quadruple witching day and marked by concurrent expirations of standardized contracts such as stock-index futures, stock-index options, single-stock futures and stock options and led to an increase in volatility. However, price movement was rather subdued and did not lead to major losses. In fact, the day saw over 9.5 billion shares being exchanged, marking the biggest daily volume witnessed since Feb 9 and the fifth highest so far in 2018.
Investors also kept a keen eye for Federal Reserve’s monetary-policy meeting scheduled for next week. The CME Fed Watch Tool has predicted that the odds of a rate hike by 0.25 percentage points on Mar 21 are around 94.4%.
McMaster Next in Trump’s Line of Fire
Late Thursday, news surfaced that Trump was planning to fire National Security Adviser Army Lt. Gen. H.R. McMaster. According to reports, he has conveyed his decision to chief of staff John Kelly. However, no source could confirm the exact timing of his ouster with some officials claiming that the event would soon happen, while the others stated that it might take months to happen. Such reports weighed on the markets.
However, in a tweet late Thursday, White House press secretary Sarah Huckabee Sanders negated such reports and stated that she had confirmed the same with Trump and that the President shared a “good working relationship” with McMaster and “there are no changes at the NSC.”
On the economic data front, housing starts for the month of February came in at 1,236,000, below the consensus estimate of 1,292,000. On the other hand, building permits came in at 1,298,000, below the consensus estimate of 1,310,000.
Meanwhile, University of Michigan’s consumer sentiment index rose to 102 for the month of March to hit its highest level since 2004.
For the week, the Dow, the S&P 500 and the Nasdaq declined 1.5%, 1.2% and 1%, respectively. During this period, President Trump fired Secretary of State Rex Tillerson, former CEO of Exxon Mobil Inc. (XOM - Free Report) . Tillerson has been replaced by CIA Director Mike Pompeo, while Pompeo’s position will be taken over by Gina Haspel, CIA’s deputy director.
Special counsel Robert Mueller reportedly subpoenaed Trump Organization for Trump’s business-related documents. This factor along with trade war fears weighed on investor sentiment. President Trump was expected to levy fresh tariffs on Chinese imports and announced that U.S.’s trade deficits with China will be reduced significantly in the process.
Stocks That Made Headlines
Eni Releases Growth-Friendly Strategic Plan for 2018-2021
Eni SpA (E - Free Report) has released its strategic plan for 2018-2021, signifying a usual progression of the same executed in the previous years and intends to continue boosting all business value. (Read More)
Hibbett (HIBB - Free Report) Q4 Earnings Mixed, Soft FY19 View Hurts Stock
Hibbett Sports Inc. (HIBB - Free Report) reported mixed results for fourth-quarter fiscal 2018, wherein earnings topped estimates and sales came in line. (Read More)
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