Dow pushes higher, but on track for weekly loss in choppy U.S. stock market

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The Dow Jones Industrial Average traded higher Friday afternoon, while other major benchmarks slipped at the end of a choppy week of trade marked by concerns about Federal Reserve policy in the face of rising inflation pressures.

How are stock benchmarks performing?
  • The Dow Jones Industrial Average DJIA, +0.42% was up nearly 90 points, or 0.3%, to reach 34,174.
  • The S&P 500 index SPX, +0.05% was down about 5 points, or 0.1%, to trade at 4,154.
  • The Nasdaq Composite Index COMP, -0.28% was down about 60 points, or 0.4%, to trade at around 13,476.

For the week, the S&P 500 and Dow were off less than 1% for the week, threatening to post a fourth weekly loss out of the past five. The Nasdaq Composite was up less than 1%, set to snap a 4-week losing streak.

What’s driving the market?

Investors sifted through a light day of data to end another tumultuous week for stocks, with economic reports coming in mixed.

Today is “pretty quiet” but inflation remains top of mind for investors, Sandy Villere, portfolio manager with Villere & Co. in New Orleans, said Friday in a phone interview. “People are trying to figure out how long the Fed is going to continue to try to keep rates lower for longer.”

The IHS Market flash U.S. composite index rose to a record 68.1 in May from 63.5 in the prior month. The flash services index increased to a record 70.1 in May from 64.7 in April, while a reading of manufacturing rose to a record 61.5 from 60.5.

Read: Flash U.S. PMI points to ‘spectacular acceleration of growth’ in May

However, housing data was soft. Existing-home sales fell 2.7% in April to a seasonally adjusted annual rate of 5.85 million annual rate, according to the National Association of Realtors.

“Tight inventories and rising home prices, which set another record in April, continue to constrain sales, particularly to lower and middle-income households who are often competing with cash buyers for the few homes available,” wrote economists Nancy Vanden Houten and Gregory Daco at Oxford Economics, in a note.

The readings come after the eurozone purchasing managers composite output index for the region climbed to a 39-month high at 56.9, with the services index at a 35-month high; the manufacturing PMI slipped to a two-month low at 62.8.

The broader market was rattled on Wednesday as the nascent crypto market sold off and as investors digested a reading of minutes from the Fed that raised the specter of the central bank at some point ending its accommodative asset purchases.

Investors will look to hear more from Fed speakers, with Dallas Fed President Robert Kaplan and San Francisco Fed President Mary Daly due to speak on Friday. Kaplan, in an interview with MarketWatch earlier this month, advocated for beginning a conversation about the central bank’s taking its foot off the gas in its support for the economy. Daly has said it is too soon to begin such discussions.

Some investors and strategists are warming to the idea of pricing pressures in the aftermath of the Covid pandemic being temporary, which has been attributed to some of the rebound in areas of the market that would be harmed by a rapid surge in inflation.

“The idea of temporary inflation seems to be creeping into the minds of the financial community, helping to calm interest in commodities,” wrote Alex Kuptsikevich, senior market analyst at FxPro.

“Furthermore, we see politicians in different parts of the world engaging in their ways to combat the inflation threat,” the analyst wrote, in a research note.

On the public health front, the number of global deaths caused by the coronavirus-borne illness COVID-19 is likely far higher than official numbers suggest, the World Health Organization said Friday.

“Based on the excess mortality estimates for 2020, the 3.4 million deaths currently reported to WHO are likely a significant undercount, with true figures at least 2-3 times higher,” said the report.

Which companies are in focus?
  • Shares of Deere & Co. DE rose 1.8%, after the construction, agriculture and turf-care equipment maker reported fiscal second-quarter profit and revenue that came in well above expectations, while warning that supply-chain pressures will increase through the rest of the year.
  • VF Corp. VFC shares fell 7.4%, after the outdoor and activity-based apparel company reported fourth-quarter profit that missed expectations. 
  • Shares of Foot Locker Inc. FL gained 2.1% after the athletic shoe and apparel retailer reported big fiscal first-quarter profit and same-store sales beats, while saying it will reposition its store fleet to focus growth in its iconic banners. 
  • Shares of Yalla Group Ltd. YALA bounced off a four-month closing low, after the voice-centric social networking platform in the Middle East and North Africa announced a $150 million stock repurchase program. The buyback program comes as the company continued to dispute recent allegations by short sellers. Its stock was up more than 15%.
  • BioNTech‘s BNTX, chief executive has said that the COVID-19 vaccine it developed with U.S. pharmaceutical group Pfizer PFE, is likely to be effective against the Indian variant of coronavirus. Shares of BioNTech were off 1.4%, while those for Pfizer were little changed.
How are other assets faring?
  • The yield on the 10-year Treasury note TMUBMUSD10Y was little changed at 1.62%. Yields and bond prices move in opposite directions.
  • The ICE U.S. Dollar Index DXY, a gauge of the currency against a basket of six major rivals, was up 0.3%.
  • Oil futures rose, with the U.S. benchmark CL00, up 2.9%. Gold futures GC00 were off 0.4%.
  • The Stoxx Europe 600 index SXXP closed 0.6% higher, up 0.4% for the week, while London’s FTSE 100 UKX was virtually unchanged for a weekly rise of 0.4%.
  • Hong Kong’s Hang Seng Index HSI fell less than 0.1%, while the Shanghai Composite SHCOMP ended 0.6% lower and Japan’s Nikkei 225 NIK rose 0.8%.

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