Zinger Key Points
- The Dow Industrials is on a bull run, defying the broader market, and is now perched at its highest level in about 18 months.
- Traders could move to the sidelines in the near term as they await a slew of tech earnings and the Fed decision next week.
- Discover Fast-Growing Stocks Every Month
U.S. stocks continued to display signs of divergence between the tech sector and the rest of the market on Friday, a trend that had already surfaced during Thursday’s session.
Following a substantial sell-off in tech stocks yesterday, the Nasdaq remained relatively flat in midday trading, while the Dow saw a 0.2% increase, poised to conclude its 10th consecutive session of gains. This positive streak marks the first such occurrence since February 2017.
Netflix Inc. NFLX extended losses, falling 3% after suffering nearly a 9% decline in its worst session of the year on the previous day.
As $2.3 trillion options expire Friday, traders adopted a cautious approach, particularly with the Nasdaq 100 reshuffle on the horizon. The reshuffle is expected to reduce the dominance of mega-cap companies and elevate the presence of smaller firms.
Cues From Friday’s Trading:
The S&P 500 gained 0.2% on the day, which would project the weekly gains to 0.9%.
Blue chips in the Dow Index were 0.2% higher, up 2.4% for the week.
The tech-heavy Nasdaq 100 was flat, down 0.5% for the week. Small caps in the Russell 2000 were also flat, but rose 1.9% this week.
US Index Performance On Friday
| US Index | Performance (+/-) | Value |
| Nasdaq 100 | +0.04% | 15,490.17 |
| S&P 500 Index | +0.3% | 4,550.20 |
| Dow Industrials | +0.22% | 35,303.46 |
| Russell 2000 | 0.05% | 1,968.95 |
Analyst Color:
As June leading economic indicators index declined by 0.7% in June, economist and gold bug Peter Schiff noted that the last negative streak this long occurred in 2007-2008, during the Great Recession.
He said the number would have been even lower but for a rising stock market.
Morgan Stanley's Lisa Shalett has a slightly different take. A strong labor market, robust housing demand and resurgent business spending could help reignite U.S. economic growth next year, she said in a weekly report released earlier this week.
"With these factors at play, the economy may indeed re-accelerate. If it does, the stock market is likely to feature a new set of winners, with today's high-flying consumer-tech and media names giving way to leaders from other equity sectors, such as industrials, energy, housing, financials and health care, as well as commodities," she added.
Thursday’s Trading In Major US Equity ETFs: In midday trading on Thursday, the SPDR S&P 500 ETF Trust SPY was 0.3% higher to $453, the SPDR Dow Jones Industrial Average ETF DIA rose 0.2% to $353 and the Invesco QQQ Trust QQQ was flat at $377.20, according to Benzinga Pro data.
The best-performing sectors on Friday were the Utilities Select Sector SPDR Fund XLU, up 1.7%, and the Health Care Select Sector SPDR Fund XLV, up 1.1%.
The laggard was the Communication Services Select Sector SPDR Fund XLC, down 1%.
The futures market has priced in a 99.8% probability of a 25 basis-point Fed rate hike at the July meeting, as inflation still remains above the Fed's target rate.
See also: Best Futures Trading Software
Stocks In Focus:
- American Express Co. AXP slipped 1.7% after missing revenue forecasts in Q2.
- Interpublic Group of Companies Inc. IPG plummeted 12% after missing revenue forecasts in Q2.
- Xirius SM Holdings, Inc. SIRI fell over 10% after its 42% rally on Thursday.
- Schlumberger Ltd. SLB fell 3% after missing revenue forecasts.
- Carvana Co. CVNA fell 2.5% after falling 16% on Thursday, despite Citigroup and JMP Securities raising their respective price targets on the stock.
Commodities, Bonds, Other Global Equity Markets:
Crude oil rose 1%, with a barrel of WTI-grade crude trading at $76.50. The United States Oil Fund ETF USO was 0.9% higher to $68.70.
Treasury yields were steady, with the 10-year yield down by 2 basis points to 3.83% and the two-year yield up by 1 basis points to 4.86%. The iShares 20+ Year Treasury Bond ETF TLT was 0.3% higher for the day.
The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.3%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.1% lower to 1.1120.
European equity indexes closed in the green. The SPDR DJ Euro STOXX 50 Etf FEZ rose 0.5%.
Gold fell 0.4% to $1,961/oz. The SPDR Gold Trust GLD was 0.3% lower to $182. Silver fell 0.3% to $24.65, with the iShares Silver Trust SLV down 0.2% to $22.60. Bitcoin BTC/USD was flat at $29,827.
Staff writer Piero Cingari updated this report midday Friday.
Photo via Shutterstock.
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