Market Snapshot: S&P 500 turns higher as U.S. stocks head for third straight week of gains

Daily Trade

U.S. stocks wavered between gains and losses on Friday as the major indexes headed for a third straight week in the green, spurred by hopes for a soft landing for the U.S. economy, and the prospect of interest-rate cuts arriving during the first half of 2024.

How stock indexes are trading

  • The Dow Jones Industrial Average
    was down 22 points, or 0.1%, at 34,921.

  • The S&P 500
    edged up 3 points, or almost 0.1%, to 4,511.

  • The Nasdaq Composite
    gained 7 points, or less than 0.1%, to around 14,121.

For the week, the Dow was on track to gain 1.9%, while the S&P 500 was on pace to rise 2.2% and Nasdaq Composite was on course for a 2.3% increase, according to FactSet data, at last check.

What’s driving markets

U.S. stocks were little changed on Friday afternoon, with the S&P 500 edging higher after earlier losses, as major benchmarks remained on track for a third straight week of gains, after a slide in Treasury yields.

“You’re not seeing broad-based selling pressure” in equities, said Keith Lerner, co-chief investment officer at Truist Advisory Services, in a phone interview Friday.

While the S&P 500’s technology-related stocks were “taking a breather” after a strong rally this month, he said there’s some “risk-on” trading in the market when looking at cyclical-oriented areas such as small-cap stocks and the S&P 500’s energy, financials and industrials sectors.

The recent move down in interest rates in the Treasury market has been supporting equities, according to Lerner. Treasury bonds yields have fallen as many investors anticipate that the Federal Reserve could start cutting its benchmark rate next year after an easing in inflation.

“The major reason for the recent rally is that Wall Street had convinced itself that the Federal Reserve is all done with hiking rates this cycle,” said Eddy Elfenbein, the manager of the CWS AdvisorShares Focused Equity ETF and blogger of Crossing Wall Street. “Investors now expect the Fed to start cutting rates in less than six months.”

But San Francisco Fed President Mary Daly said Friday that the central bank should wait on interest-rate policy given the high uncertainty surrounding the outlook for the U.S. economy. Boston Fed President Susan Collins also said in an interview with CNBC on Friday, “I wouldn’t take additional firming off the table,” even after softer inflation data released earlier this week.

The S&P 500’s energy sector
was seeing the biggest gains on Friday afternoon, up around 2.4%, followed by more modest increases for consumer discretionary
and materials
As for small-cap U.S. stocks, the Russell 2000 index
was trading up a sharp 1.3%.

Read: Surge in bullish bets could help push stocks higher with $2.4 trillion in options set to expire Friday

Meanwhile, investors were weighing economic data released Friday that showed construction of new homes rose 1.9% in October. They were also digesting corporate earnings reports, with shares of retailer Gap Inc.

surging after the company said it didn’t have to discount as much during the third quarter as inventories fell.

Companies in focus

Steve Goldstein contributed to this report.

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