Energy, housing stocks lift Wall Street; dollar weakens on data

Russell rebalance boosts trading volume

NEW YORK, June 24, (Agencies): World stocks advanced on Friday to end the week with a slight gain as a drop in the dollar helped boost slumping oil prices.

The dollar fell against a basket of major currencies as preliminary data on US factory and services activities in June fell short of analyst forecasts, stoking doubts about US economic growth for the rest of 2017.

“Overall, the market is saying it would be nice to have a little more strength in the energy sector but the economy is doing OK without it,” said David Joy, chief market strategist at Ameriprise Financial in Boston.

The climb in crude helped lift energy stocks on Wall Street, with the group up 0.8 percent.

The US dollar briefly managed to recoup some of its declines after economic data showed new US singlefamily home sales rose in May and the median sales price surged to an alltime high. The PHLX housing index advanced 0.6 percent.

The slide in energy prices in recent weeks has worsened the outlook for inflation, creating a problem for the world’s major central banks as they attempt to normalize interest rates after years of ultra-loose policy.

The pan-European FTSEurofirst 300 index lost 0.28 percent and MSCI’s gauge of stocks across the globe gained 0.19 percent to close out the week up 0.2 percent.

The dollar index fell 0.34 percent, with the euro up 0.41 percent to $1.1196.

The dollar had hit a one-month high on Tuesday following comments with a hawkish tone from Fed officials, including New York Fed President William Dudley and Boston Fed President Eric Rosengren. But it has been stuck in a tight range since and is up slightly on the week.

Earlier on Friday, St Louis Fed President James Bullard said the central bank should wait on any further rate increases until inflation is reliably heading to the Fed’s 2-percent target. Cleveland Fed President Loretta Mester said failure to hike US rates could mean missing inflation and employment goals that could cause a recession.

US

US stocks ended higher on Friday after a last-minute trading spike and a technology sector gain offset weakness in financial stocks and sent the Nasdaq higher, giving it a weekly gain for the first time in three weeks.

The energy sector rebounded and finished the strongest of the S&P’s 11 sectors with a 0.8 percent rise as oil prices came back from multi-month lows.

Bank stocks ended lower even after they passed their annual stress test as some results were weaker than expected and investors focused on a flatten- ing yield curve.

The healthcare rally faded on Friday as investors tried to decipher whether a Senate Republican bill to replace Obamacare, released Thursday, would gain enough support to pass.

The sector closed down 0.1 percent, clawing back some losses after it dropped sharply late in the session when Republican Senator Dean Heller became the fifth US Republican senator to say he would not support a healthcare bill unveiled by his party on Thursday. The sector still closed 3.6 percent higher for the week.

Trading volume jumped just before the close due to FTSE Russell’s completion of the annual refresh of its benchmarks.

“The effect is going to be focused on small-caps but there’s an echo of that in large caps,” said Don Townswick, Director of Equity Strategy at Conning & Co in Hartford, Connecticut who noted that most rebalance related trading is around the close.

More than 10.4 billion shares changed hands on US exchanges, well above the 7.2 billion average for the last 20 sessions.

Oil prices edged up Friday after hitting their lowest point since August earlier in the week, but showed an almost 20 percent year-to-date drop as production cuts have failed to reduce oversupply.

Even after Friday’s gains, the energy sector posted its worst weekly decline since September.

The Dow Jones Industrial Average closed down 2.53 points, or 0.01 percent, to 21,394.76, the S&P 500 gained 3.8 points, or 0.16 percent, to 2,438.3 and the Nasdaq Composite added 28.57 points, or 0.46 percent, to 6,265.25.

For the week, the Dow added 0.05 percent, the S&P rose 0.21 percent and the Nasdaq gained 1.84 percent.

Big technology stocks, including Apple, Facebook and Microsoft, were the S&P 500’s biggest boosts on the day and sent up the tech sector 0.7 percent.

The S&P financial index, fell 0.47 percent, with pressure from banking stocks after the stress test results and ahead of the second part of their test due on Wednesday.

Europe

Europe’s main stock markets and Wall Street stumbled Friday on disappointing economic data heading into the weekend while London marked a year since Brexit with another pale session.

European stock markets are “on the back foot, with a host of eurozone PMI surveys ... providing a somewhat cautious assessment,” said analyst Joshua Mahony at trading firm IG.

Shares in London saw a fourth straight day of losses a year to the day after Britain shocked its neighbours by voting to leave the European Union, with the FTSE 100 index of leading shares losing 0.2 percent. Key figures around 1600 GMT London - FTSE 100: Down 0.2 percent at 7,424.13 points (close)