Wall Street ended mixed on Friday, taking a breather after three straight record-breaking sessions. Sentiment took a hit after a post-earnings slide in Lululemon Athletica (LULU) and Nike (NKE) dragged down the consumer discretionary sector.
The tech-heavy Nasdaq Composite (COMP:IND) rose 0.16% to close at 16,428.82 points, while the blue-chip Dow (DJI) retreated 0.77% to settle at 39,475.64 points. The S&P 500 (SP500) slipped marginally by 0.14% to conclude at 5,234.18 points, with the benchmark index having closed at a new high the past three days.
Of the 11 S&P sectors, eight ended in the red.
The S&P (SP500) also delivered its best week of 2024, having gained 2.29%. The Dow (DJI) similarly posted its best weekly performance of the year, advancing 1.97%. The Nasdaq (COMP:IND) was up 2.85%, notching its second best week of the year.
The Federal Reserve has been one of the main drivers of this week’s gains. The central bank on Wednesday held interest rates steady for a fifth straight monetary policy meeting. More notably, officials bumped up their growth forecasts in the updated dot plot while reiterating an expectation for three rate cuts this year. Finally, Fed chair Jerome Powell in his post-decision press conference was much more dovish than anticipated.
“The bear rallying cry of ‘higher for longer’ appears to be coming true, though not in the way they expected. Inflation is proving more resistant than expected, but since the Fed appears to be treating it as transitory once more, it is equities that have stayed higher for longer – and in fact continue to move up,” Alex King, investing group leader of Cestrian Capital Research, told Seeking Alpha.
“The fruitless nature of religious views on stocks’ direction is, of course, that bears will in the end be proven right; most likely inflation runs away again and has to be stomped on once more, with consequent collateral damage to risk assets. That, we think, is the crisis on the horizon. But it’s not today’s crisis. Today, tomorrow, next week, next month, we believe equities will trend up. Towards year end that may change, but for now, we continue to look upwards,” King added.
The Fed euphoria appeared to have settled on Friday, with earnings reports from some big companies taking the spotlight. The apparel and footwear sectors were active after a pair of major reports.
Lululemon (LULU) slumped around 16% and ended as the top percentage loser on both the S&P 500 (SP500) and the Nasdaq (COMP:IND), after the yoga wear maker issued current quarter and annual guidance that missed expectations.
Meanwhile, Nike (NKE) slid about 7% and ended among the top percentage losers on both the S&P (SP500) and the Dow (DJI). The sportswear and footwear giant warned of a short-term revenue dip as it shifts its focus to innovation.
Conversely, FedEx (FDX) jumped more than 7% and ended as the top percentage gainer on the S&P 500 (SP500). The parcel delivery giant – which is often seen as a global economic bellwether – delivered mixed quarterly results. However, the better-than-anticipated results from its Express segment coupled with upbeat management remarks cheered investors.
Turning to the fixed-income markets, Treasury yields were lower on Friday. The longer-end 30-year yield (US30Y) was down 4 basis points to 4.39%, while the 10-year yield (US10Y) was down 6 basis points to 4.21%. The shorter-end more rate-sensitive 2-year yield (US2Y) was down 3 basis points to 4.60%.
See how Treasury yields have done across the curve at the Seeking Alpha bond page.
