U.S. stocks ended higher on Friday, snapping their two-day losing streak, in a choppy trading session, as investors shrugged off tougher comments from Fed officials about rate hikes. All three major indexes ended in positive territory. However, indexes ended in the red for the week.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) climbed 0.6% or 199.37 points to end at 33,745.69 points.
The S&P 500 rose 0.5% or 18.78 points to close at 3,965.34 points. Utilities, real estate and healthcare stocks were the biggest gainers. However, energy stocks weighed on the index.
The Utilities Select Sector SPDR (XLU) jumped 2.1%, while the Real Estate Select Sector SPDR (XLRE) gained 1.3%. The Health Care Select Sector SPDR (XLV) gained 1.2%. The Energy Select Sector SPDR (XLE) fell 0.8% Nine of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq gained less than 0.1% or 1.1 points to finish at 11,146.06 points.
The fear-gauge CBOE Volatility Index (VIX) was down 3.38% to 23.12. A total of 9.7 billion shares were traded on Friday, lower than the last 20-session average of 12 billion.
Upbeat Sentiment Fading
The upbeat sentiment that had been helping markets since the release of the October consumer price index (CPI) data is slowly fading. CPI data for October showed that the cost of living was easing. This gave investors’ confidence a boost as they started speculating that the Fed may finally think of slowing down its aggressive interest rate hike policy.
Stocks have been on a rally since then but seem to be slowly losing steam after Fed officials over the week said that it was too early to expect a pause in interest rate hikes. On Thursday, Federal Reserve Bank of Saint Louis President James Bullard said that the Fed will have to continue increasing interest rates to bring down inflation. He also showed a chart that hinted at interest rates could go up to as much as 5% and 7%.
Also, Federal Reserve Bank of Boston leader Susan Collins said that although there is little evidence that inflation is easing, the Fed still needs to go for at least another 75-basis-point rate hike to bring down inflation.
The comments weighed on markets but investors tried to shrug them off, while many remained skeptical about the future of the economy. This resulted in a choppy trading session throughout Friday.
Defensive stocks made up for the declines in energy sector stocks. Shares of American Electric Power Company, Inc. AEP gained 2.5%, while Avangrid, Inc. AGR climbed 3%. Shares of Atmos Energy Corporation ATO jumped 3.5%. American Electric Power Company has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The National Association of Realtors said on Friday that existing home sales tumbled 5.9% in October, recording its ninth straight month of decline. On a year-over-year basis, it declined 28.4%.
In other economic data released on Friday, the Conference Board Leading Economic Index declined 0.8% in October to 114.9, after declining 0.5% in September.
All three major indexes finished the week in the red. The Dow declined less than 0.1%, while the S&P 500 lost 0.7%. The Nasdaq was the worst performer, declining 1.6% for the week.
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