Stocks end choppy day mostly higher
Stock indexes finished mostly higher Friday as Wall Street shook off an early slide, closing out a solid week of gains for the market.
The S&P 500 index inched up 0.2% after having been down 0.5%. It ended the week with a 3.2% gain, largely due to a big rally on Monday that offset all of the benchmark index’s losses from earlier in the month.
Strength in technology, communications and real estate stocks helped reverse much of the market’s early slide. Energy stocks fell the most as crude oil prices closed lower after six straight gains. Bond yields were mixed. Trading was choppy for much of the day ahead of the long holiday weekend. Markets in the U.S. will be closed Monday for Memorial Day.
Fresh hopes for an economic recovery in the second half of the year and optimism about a potential vaccine for COVID19 helped spur stocks higher for much of the week. Investors are betting that the economy and corporate profits will begin to recover from the coronavirus pandemic as the U.S. and countries around the world slowly open up again.
Traders remain wary, however, that the reopening of businesses could lead to another wave of infections, potentially hobbling efforts to get the nation’s battered economy growing again.
“We’re in a bit of a hold right now looking for the next catalyst,” said Brian Levitt, global market strategist at Invesco. “There’s still an awful lot of uncertainty we have to work though.”
The S&P 500 rose 6.94 points to 2,955.45. The index is still down 12.7% from its alltime high in February. The Dow Jones industrial average slipped 8.96 points, or less than 0.1%, to 24,465.16. The Nasdaq composite added 39.71 points, or 0.4%, to 9,324.59.
Despite the uneven finish, the three major stock indexes each ended the week more than 3% higher. Those gains were blown away by the rally in small company stocks, which drove the Russell 2000 index 7.8% higher for the week, a bullish signal suggesting that investors expect that the economy is on the path to recovery. On Friday, the Russell 2000 gained 7.97 points, or 0.6%, to 1,355.53.
Fears of a recession sent the S&P 500 into a skid of more than 30% from its high in February. Hopes for a relatively quick rebound and unprecedented moves by the Federal Reserve and Congress to stem the economic pain drove a turnaround for stocks in April and have bolstered optimism.
Investors are now keenly focused on the process of reopening the U.S. economy, which is likely to continue accelerating as the summer progresses.
“The markets are expecting a reasonable resumption of economic activity, a manageable increase in coronavirus cases and a manageable situation when it comes to our health care system,” said Mike Zigmont, head of trading and research at Harvest Volatility Management. “If we have a second freezing of the economy, then this market is grossly overvalued and the only people that are right now are the bears.”
Oil prices fell, snapping a sixday rise. Benchmark U.S. crude oil fell 2% to settle at $33.25 per barrel. Brent crude oil, the international standard, fell 2.6% to settle at $35.13 per barrel.
The yield on the 10year Treasury note fell to 0.66% from 0.67% late Thursday.
The choppy trading on Wall Street followed a downbeat day in Asia. Hong Kong’s main index dropped 5.6% after China made more moves to limit political opposition in the former British colony. Beijing also abandoned its longstanding practice of setting economic growth targets. European markets shook off some early weakness and ended mixed.
Beijing’s move to take over longstalled efforts to enact national security legislation in semiautonomous Hong Kong spooked investors in Asian markets who have endured months of prodemocracy demonstrations last year that at times descended into violence between police and protesters.
The proposed bill is aimed at forbidding secessionist and subversive activity, as well as foreign interference and terrorism. The move has drawn strong rebukes from the U.S. government and rights groups.