US stocks snap 3-day losing streak in roller coaster week
Gains among technology companies helped snap a three-day losing streak for US stocks Friday, though the market ended with its worst weekly loss since March. The modest rebound came at the end of a turbulent week on Wall Street as escalating tensions between the US and North Korea rattled global markets.
In the first four days of the week, the Standard & Poor’s 500 index swung from marking its latest record high to posting its biggest single-day drop in nearly three months. The negative headlines provided many investors with an opportunity to pocket some of their recent gains following a string of record highs fueled by strong corporate earnings.
“It’s been a bit of a roller coaster this week, with all the rhetoric between the US and North Korea,” said Jeff Kravetz, regional investment strategist at US Bank Wealth Management. “That did temporarily shake investors’ complacency, but we think markets are ready to move higher in the back half of the year, and earnings and economic data are going to drive that.”
On Friday, the S&P 500 rose 3.11 points, or 0.1 percent, to 2,441.32. The index had its biggest drop since midMay a day earlier. The Dow Jones industrials average gained 14.31 points, or 0.1 percent, to 21,858.32. The Nasdaq added 39.68 points, or 0.6 percent, to 6,256.56. The Russell 2000 index of smaller-company stocks picked up 1.69 points, or 0.1 percent, to 1,374.23.
Recovery
The recovery fit a recent pattern of investors using dips to put more money in stocks. Despite the past week’s decline, the major indexes are in positive territory so far this year, led by the Nasdaq, which is up 16.2 percent. The S&P 500 is up 9 percent, while the Dow is up 10.6 percent.
“If you strip away what’s going on in North Korea, and if you strip away what’s going on in Washington, which are things that are tougher to predict, the economy, the global recovery, earnings, it all paints a very positive picture for the rest of the year,” Kravetz said. Tensions between the US and North Korea continued to simmer ear- ly Friday. In a tweet, President Donald Trump warned of military action “should North Korea act unwisely,” noting that the US is “locked and loaded.” Earlier in the week, Trump said the US would unleash “fire and fury” on North Korea if it continued to threaten the US.
North Korea had announced a detailed plan to launch a salvo of ballistic missiles toward the U.S. Pacific territory of Guam, a major military hub and home to US bombers.
Still, there were fewer signs of anxiousness in the markets Friday. Bond and gold prices, traditional havens for nervous investors, were little changed, and the VIX, a measure of how much volatility investors expect in stocks, fell 3.3 percent following a 44.4 percent jump the day before. It’s still the highest it’s been since May.
Inflation
Investors also drew some encouragement from new government data showing US inflation at the consumer level inched higher last month. July’s 0.1 percent increase in consumer prices suggests that the Federal Reserve may be less likely to raise interest rates next month. Inflation has risen 1.7 percent over the past 12 months, suggesting that inflation pressures remain well under control. The Fed, which raised its key interest rate in March and June, has signaled it plans a third rate hike before the end of this year. But some economists say the Fed may stand pat for the rest of 2017 unless inflation accelerates in coming months.
“Today’s inflation data put the Fed on pause and really diminishes the fact that there’s still some noise going around with the North Korea-US situation,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. Technology companies, which suffered the brunt of the selling a day earlier, were back in the lead Friday. Lam Research Corp. climbed $4.82, or 3.2 percent, to $154.26.
Seagate Technology gained 2.3 percent after investor ValueAct disclosed that it had acquired a 7.2 percent stake in the digital storage company. Seagate shares rose 74 cents to $32.29. — AP