Friday began positively for U.S. stocks, supported by moderately positive job market data, concluding a week of economic indicators that were neither too strong nor too weak, solidifying expectations for the end of the Federal Reserve’s interest rate hikes.
However, the initial optimism for an ideal economic scenario was short-lived as renewed concerns about the economy caused stocks to reduce their gains during midday trading. With increasing unemployment and declining wage growth, investors are worried that an economic slowdown will lead to reduced consumer spending, resulting in lower profits for U.S. companies.
Tesla Inc. experienced a decline of over 4%, losing nearly $50 in market capitalization, as Elon Musk lowered prices for Model S and Model X by approximately 14% and 21% respectively.
On the other hand, oil prices continued to rise due to optimism about Chinese economic stimulus, while oil producers maintained their commitment to keeping supplies tight. The price of WTI crude oil increased by 2% to $85, reaching its highest level since November 2022.
In Friday’s trading, major indices saw their gains trimmed after the market opened, with the exception of small-cap stocks. The S&P 500 and the Dow Jones managed to stay relatively flat, while the Nasdaq 100 fell by 0.3%. The Russell 2000, however, rose by 1.1%.
Among major U.S. equity ETFs, the SPDR S&P 500 ETF Trust remained unchanged at $450.42, the SPDR Dow Jones Industrial Average ETF increased by 0.1% to $348, and the Invesco QQQ Trust fell by 0.3% to $377.
Looking at S&P 500 sector ETFs, the Energy Select Sector SPDR Fund performed the best, rising by 1.8% on the day. The Consumer Staples Select Sector SPDR Fund experienced the largest decline, falling by 1%, followed by the Utilities Select Sector SPDR Fund (-0.9%) and the Communication Services Select Sector SPDR Fund (-0.8%).
In terms of economic data, August job creation exceeded expectations, but unemployment increased and wage growth slowed. Additionally, the manufacturing PMI inched higher but still indicated industry contraction, further supporting the case for interest rates remaining unchanged.
In terms of specific stocks, Lululemon Athletica Inc. saw a more than 5% increase in its share price following strong earnings results. Chinese-related equities, including Alibaba Group Holdings Ltd., NIO Inc., Li Auto Inc., PDD Holdings Inc., JD.com Inc., Baidu Inc., and Tencent Music Entertainment Group, experienced gains between 3% and 7%. Entertainment stocks, however, dipped due to Disney’s restriction of channels like ESPN and ABC on Charter’s cable. Warner Bros. Discovery, Inc. fell by 9% and Charter Communications, Inc. eased by 2.5%.
Other notable movements in stock prices were observed based on earnings reports. Broadcom, Inc. decreased by over 5%, Dell Technologies, Inc. rose by about 22%, MongoDB, Inc. increased by about 5%, Oxford Industries, Inc. decreased by about 2%, PagerDuty, Inc. fell by nearly 7%, and SentinelOne, Inc. rose by about 5%.
In commodities and bonds, crude oil prices increased by nearly 2% with WTI crude trading at $85 per barrel. The United States Oil Fund ETF rose by 1.8%. Treasury yields saw slight increases, with the 10-year yield rising by 7 basis points to 4.19% and the two-year yield rising by 2 basis points to 4.88%. The iShares 20+ Year Treasury Bond ETF decreased by 2%. The U.S. dollar index rose by 0.5%, while the EUR/USD pair fell by 0.6% to 1.0780.
European equity indices performed poorly, with the SPDR DJ Euro STOXX 50 ETF falling by 0.9%. Gold decreased by 0.1% to $1,937 per ounce, while silver fell by 0.8% to $24.21. Bitcoin decreased by 0.3% to $25,855.