Stocks’ modest gains lift indexes to new records
Gains by big technology and healthcare companies pushed U.S. stocks modestly higher Friday, lifting several major indexes to new highs.
The Standard & Poor’s 500 index, Dow Jones industrial average and Russell 2000 index of smaller-company stocks each set records as the market posted its third straight day of gains.
Energy companies helped lift the market as crude oil prices rose. High-dividend stocks such as real estate companies and utilities also posted big gains following a drop in bond yields. The lower yields and a weak forecast from JPMorgan Chase weighed on banks. Financial stocks were the only sector in the S&P 500 to decline.
Investors brushed off a report showing U.S. retail sales fell in June, and they drew encouragement from data indicating industrial production rebounded last month. Traders also welcomed a report showing that inflation at the consumer level was flat in June, which suggests that the Federal Reserve may have more reason to delay another interest rate increase.
“The low inflation data will put the Fed more in a wait-and-see mode to really determine if the low inflationary environment is really transitory,” said Lindsey Bell, investment strategist at CFRA Research.
The S&P 500 index rose 11.44 points, or 0.5%, to 2,459.27. The Dow rose 84.65 points, or 0.4%, to 21,637.74. The average has hit a record high three days in a row.
The Nasdaq composite advanced 38.03 points, or 0.6%, to 6,312.47. The Russell 2000 index ticked up 3.16 points, or 0.2%, to 1,428.82.
The indexes all ended the week with gains and are on pace to finish higher this month.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.33% from 2.35% late Thursday.
Investors had mix of company earnings and economic data to consider Friday.
The Commerce Department said retail sales fell 0.2% in June as Americans curtailed spending at restaurants, department stores and gasoline stations. That followed a 0.1% drop in May. In addition, the Federal Reserve said U.S. factory output rebounded in June as manufacturers churned out more cars, appliances and furniture. Overall industrial production rose 0.4% and is up 2% over the past year.
Meanwhile, the Labor Department said U.S. consumer prices were flat in June, the latest evidence that inflation remains muted. All told, inflation has climbed just 1.6% from a year ago.
The market rallied Wednesday after Federal Reserve chief Janet L. Yellen hinted that the Fed could slow its rate-hike plans if inflation continues to run below the Fed’s 2% target. As such, the June consumer prices data suggests that “the Fed is not going to get too aggressive on rate hikes,” Bell said.
Several big banks reported their second-quarter earnings Friday. Among them were JPMorgan Chase, Citigroup and Wells Fargo, each of which posted results that beat Wall Street’s expectations. But it wasn’t all good news.
JPMorgan, the nation’s largest bank by assets, said it expects weaker net interest income. Falling bond yields also weighed on the sector. When bond yields fall, it forces interest rates on loans lower, which makes it harder for banks to make money from lending.
JPMorgan shares fell 0.9% to $92.25. Citigroup slipped 0.4% to $66.72. Wells Fargo declined 1.1% to $54.99.
“It’s an encouraging sign that the market is rotating outside of financials, but [investors] didn’t use it as a catalyst to take down the whole market,” said Victor Jones, trading director at TD Ameritrade.
Technology and healthcare companies were among the big gainers. NetApp jumped 5.5% to $43.64 — the biggest rise in the S&P 500. Microsoft rose 1.1% to $72.78. Zimmer Biomet Holdings advanced 2.7% to $132.49.
Harmonic slid 9.2% to $4.68 after the San Jose video services company issued second-quarter estimates that disappointed investors.
Companies that pay big dividends, such as real estate investment trusts, moved higher as bond yields decreased. GGP climbed 2.9% to $23.59. Iron Mountain rose 2.5% to $34.78.
Despite the June decline in retail sales, investors bid up shares in several retail chains after some analysts upgraded the sector the day after Target raised its second-quarter forecasts and said sales and customer traffic increased. Ulta Beauty shares rose 1.7% to $261.74. Gap climbed 2.2% to $23.28.
Energy futures closed higher. Benchmark U.S. crude rose 46 cents, or 1%, to $46.54 a barrel. Brent crude, used to price international oils, rose 49 cents, or 1%, to $48.91 a barrel.
Wholesale gasoline rose 3 cents to $1.56 a gallon. Heating oil rose 2 cents to $1.52 a gallon. Natural gas rose 2 cents to $2.98 per 1,000 cubic feet.
The increase in oil and gas prices helped lift energy stocks. Chesapeake Energy climbed 1.9% to $4.87.
The dollar fell sharply, sliding to 112.56 yen from 113.23 yen. The ICE U.S. Dollar Index, which compares the dollar against a basket of major currencies, fell to its lowest level since September. The U.S. currency also weakened against the euro, which rose to $1.1467 from $1.1406.
Gold rose $10.20, or 0.8%, to $1,227.50 an ounce. Silver rose 24 cents, or 1.5%, to $15.93 an ounce. Copper rose 3 cents to $2.69 a pound.
Major stock indexes in Europe finished mostly lower. Germany’s DAX fell 0.1%, while the CAC 40 in France was flat. The FTSE 100 index of leading British shares slid 0.5%.
Earlier in Asia, Japan’s Nikkei 225 ticked up 0.1%, and South Korea’s Kospi and Hong Kong’s Hang Seng index each rose 0.2%.
UPDATES:
2:55 p.m.: This article was updated with closing prices, context and analyst comment.
This article was originally published at 7:45 a.m.
