WASHINGTON (dpa-AFX) - Stocks moved mostly higher early in the session on Friday but have given back ground over the course of the trading day. The major averages have all pulled back well off their highs of the session.
The Nasdaq and the S&P 500 briefly dipped into negative territory along with the Dow but have subsequently bounced back above the unchanged line.
Currently, the major averages are turning in a mixed performance. While the Dow is down 71.79 points or 0.2 percent at 41,263.26, the Nasdaq is up 62.35 points or 0.4 percent at 17,578.78 and the S&P 500 is up 10.81 points or 0.2 percent at 5,602.77.
The early strength on Wall Street reflected a positive reaction to readings on U.S. consumer price inflation that are said to be preferred by the Federal Reserve.
The Commerce Department report showed consumer prices increased in line with economist estimates in the month of July, while the annual rate of price growth was unexpectedly flat.
The report said the personal consumption expenditures (PCE) price index rose by 0.2 percent in July after inching up by 0.1 percent in June. The modest increase matched expectations.
The core PCE price index, which excludes food and energy prices, also crept up by 0.2 percent in July. The uptick matched the increase seen in June as well as economist estimates.
Meanwhile, the report said the annual rates of growth by the PCE price index and the core PCE price index were both unchanged at 2.5 percent and 2.6 percent, respectively.
Economists had expected the year-over-year growth by both the PCE price index and the core PCE price index to tick up by 0.1 percentage point.
While the data has reinforced expectations of an interest rate cut by the Fed next month, some analysts, such as Harris Financial Group managing partner Jamie Cox, have said there is no justification for a 50 basis point rate cut.
Trades may have felt a 25 basis point rate cut in September is already priced into the markets and taken the opportunity to cash in on the early strength.
According to CME Group's FedWatch Tool, there is a 69.5 percent chance of a quarter point rate cut next month and a 30.5 percent chance of a half point rate cut.
However, ING Chief International Economist James Knightley said, 'A soft jobs report [next week] could still tip the odds in favour of a 50bp rate cut'
Sector News
Oil service stocks have come under considerable selling pressure over the course of the session, dragging the Philadelphia Oil Service Index down by 1.5 percent.
The weakness among oil service stocks comes amid a steep drop by the price of crude oil, with crude for October delivery plunging $2.17 to $73.74 a barrel.
Notable weakness has also emerged among gold stocks amid a significant decrease by the price of the precious metal, while networking and biotechnology stocks have also moved to the downside.
On the other hand, semiconductor stocks have pulled back off their highs of the session but continue to turn in a strong performance, resulting in a 1.6 percent gain by the Philadelphia Semiconductor Index.
Intel (INTC) remains up by 7.7 percent after a report from Bloomberg said the chipmaker is working with investment bankers to consider various options, including a split of its product-design and manufacturing businesses.
Chipmaker Marvell Technology (MRVL) has also soared by 9.6 percent after reporting better than expected fiscal second quarter results.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index advanced by 0.7 percent, while Hong Kong's Hang Seng Index jumped by 1.1 percent.
Meanwhile, the major European markets ended the day slightly lower. While the French CAC 40 Index edged down by 0.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index both closed just below the unchanged line.
In the bond market, treasuries have come under pressure over the course of the session after showing a lack of direction early in the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.2 basis points at 3.909 percent.
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