Relief rally sends Dow higher by 800 points; Nasdaq, S&P 500 climb more than 3%

JaysonPhotography/iStock via Getty Images

After a couple of sessions of uncertain trading, buyers confidently asserted themselves on Friday, with stocks finishing the week with substantial gains. The advance allowed Wall Street to regain some of the losses posted last week, in a rally led by cyclical sectors that missed out on the previous day’s advance.

The Dow (DJI) +2.7%, the S&P (SP500) +3.1% and the Nasdaq (COMP.IND) +3.3%.

The S&P moved well through resistance at 3,800 and finished near the important 3,900 level.

Yields pushed higher but saw choppy action after an unexpected jump in new home sales. The 10-year Treasury yield climbed 7 basis points to 3.14%. The 2-year rose 4 basis points to 3.05%.

Looking more closely at the latest economic data, May home sales rose 10.7% to an annual rate of 696K. The reading provided a rare bright spot in recent string of dismal data for the housing sector.

“These data are wild – the margin of error in the May print is gigantic, +/-18.9% – and we were always suspicious of the reported extent of the April plunge, which has now been revised up,” Pantheon Macro’s Ian Shepherdson said.”But the May bounce does not change the big picture at all; the housing market is rolling over, and sales will fall sharply over the next few months, lagging the plunge in mortgage applications.”

Shepherdson added: “Potential homebuyers’ purchasing power has been drastically reduced by the surge in mortgage rates, so demand has plunged.”

In other economic data, the final measure of June Michigan consumer sentiment fell to 50. However, five-year inflation expectations dropped to 3.1% from 3.3%.

Among active stocks, cruise lines dominated the S&P gainers list after strong results from Carnival.

Leave a Reply

Your email address will not be published.