U.S. stock markets closed at record highs on Friday following the release of cooler-than-expected inflation data. Soft inflation data boosted market participants’ expectations of another round of interest rate cut by the Fed this month. All three major stock indexes ended in positive territory. For the week as a whole, these three indexes finished in green too.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) appreciated 1% or 472.51 points to close at 47,207.12, marking the index’s first closing in history above the technically crucial 47,000 barrier. Notably, 19 components of the 30-stock index ended in positive territory, while 11 finished in negative territory. At the intraday high, the blue-chip index touched a record 47,326.73.
The tech-heavy Nasdaq Composite finished at 23,204.87, climbing 1.2% or 263.07 points driven by the strong performance of technology bigwigs. This marked a fresh record close for the index. At the intraday high, the tech-laden index touched a record 23,261.26.
The major gainer of the index was Advanced Micro Devices Inc. AMD. The stock price of the semiconductor behemoth jumped 7.6%. Advanced Micro Devices currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 gained 0.7% to finish at 6,791.69, reflecting a new closing high for the benchmark. At the intraday high, the broad-market index touched a record 6,807.11. Out of the 11 broad sectors of the broad-market index, six ended in positive territory, while five were in negative territory.
The Financials Select Sector SPDR (XLF), the Utilities Select Sector SPDR (XLU) and the Technology Select Sector SPDR (XLK) rose 1.1%, 1.2% and 1.6%, respectively. On the other hand, the Energy Select Sector SPDR (XLE) tumbled 1%.
The fear gauge, the CBOE Volatility Index (VIX) fell 5.4% to 16.37. A total of 19.04 billion shares were traded on Friday, lower than the last 20-session average of 20.75 billion. Advancers outnumbered decliners on the NYSE by a 2.18-to-1 ratio. On Nasdaq, a 2.20-to-1 ratio favored advancing issues.
The S&P 500 recorded 34 new 52-week highs and four new 52-week lows. The Nasdaq Composite registered 124 new 52-week highs and 44 new 52-week lows.
Mild CPI Inflation for September
On Oct 24, the Department reported the consumer price index (CPI) data for September. The data was released late due to the ongoing U.S. government shutdown, which is currently the second largest in history.
The headline CPI for September increased 0.3% month over month, lower than the Zacks Consensus Estimate of 0.4%. The metric for August was also 0.4%. Year over year, the headline CPI increased 3% in September, higher than August’s metric of 2.9% but lower than the consensus mark of 3.1%. However, the reading for September was the highest since May and higher than the past 12-month average of 2.7%.
Core CPI (excluding volatile food and energy items) for September increased 0.2% month over month, lower than the Zacks Consensus Estimate of 0.3%. The metric for August was also 0.3%, marking the strongest monthly rise in six months. Year over year, core CPI increased 3% in September, below the consensus estimate of 3.1%. The reading for August was also 3.1%.
Following the benign inflation data, investors are expecting more cuts in interest rate this year. The CME FedWatch interest rate derivative tool currently shows a 98.9% probability that the Fed will reduce the Fed fund rate by 25 basis points in October and a 91.8% probability that the central bank will further reduce the rate by another 0.25% in December.
Other Economic Data
The University of Michigan reported that the final index for October consumer sentiment came in at 53.6 compared with 55.1 in September and October’s preliminary index of 55. The Zacks Consensus Estimate was 54.9. The current economic condition index for October was 58.6 compared with 60.4 in September. Consumer expectations in October came in at 50.3 compared with 51.7 in September. Also, 1-year short-term inflation expectation fell marginally to 4.6% in October from 4.7% in September. Long-term inflation expectation held steady at 3.7%.
Weekly Roundup
Last week was strong for Wall Street. Concerns related to the U.S. government shutdown and the escalation of U.S.-China trade conflicts were sidelined by strong third-quarter earnings, soft inflation and the hope for more rate cuts. The Dow, the S&P 500 and the Nasdaq Composite moved up 2.2%, 1.9% and 2.3%, respectively.
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Advanced Micro Devices, Inc. (AMD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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