The Dow and S&P 500 on Friday logged their sixth straight advance, notching a slight gain at the close, with the benchmarks ending well off session highs as political news sparked late-session turbulence.
Special Counsel Robert Mueller announced the indictments of 13 Russian nationalsand three Russian entities, accusing them of interfering in U.S. elections. Major indexes had been solidly higher in afternoon trading before the announcement.
How are the benchmarks performing
The Dow Jones Industrial Average DJIA, +0.08% rose 19.01 points, or less than 0.1%, to 25,219.38. The S&P 500 index SPX, +0.04% added 1.02 point to 2,732.22. The Nasdaq Composite Index COMP, -0.23% meanwhile, closed down 16.96 points, or 0.2%, to 7,239.47.
Both the Dow and the S&P extended their recent rally to a sixth straight day; the Dow last had a rally of this length in November, while the S&P’s last six-day advance was in January. The Nasdaq snapped a five-day rally.
For the week, the Dow rose 4.3% in its biggest one-week percentage rise since November 2016. The S&P 500 also gained 4.3% in its best week since January 2013, while the Nasdaq ended up 5.3% in its best weekly percentage gain since December 2011.
Also at current levels, the Dow is 5.3% below its all-time high, hit last month. The S&P is 4.9% below its own record, while the Nasdaq stands 3.6% shy of its own.
What drove markets?
Investors watched for any signs of inflation in the economy, the threat of which sparked recent volatility in equities, which at one point pushed the Dow and the S&P 500 into correction territory, defined as a drop of at least 10% from a peak. Equity benchmarks have since cut those losses substantially. Trading was expected to remain light ahead of the long holiday weekend. U.S. financial markets will be closed Monday in observance of Presidents Day.
Signs that the economy is growing, but not in any danger of overheating, helped stocks to move ahead this week and take the sting out of last week’s losses. Alongside that recovery, bullish sentiment jumped, according to a weekly survey, nearing “unusually high” levels.
However, a reading on import prices for January showed a monthly increase of 1%, another sign that once-subdued inflation pressures are building. Data earlier in the week showed a rise in consumer-price inflation, which is watched as one barometer for the Federal Reserve’s interest-rate plans. The import-price increase was hotter than the 0.7% rise in import prices expected by a FactSet poll of analysts, and compares with a 0.1% gain in December.
The news of the indictment delivered another element of uncertainty into markets. Political news has spurred volatility in the past, although the impact has been short-lived. In December, stocks came under pressure following reports that Michael Flynn, the former national security adviser, would testify about President Donald Trump. Equities quickly shrugged off that news and returned to record levels.
What are strategists saying?
“Corrections are funny things: investors and institutions can get scared or shaken, and sometimes those violent pullbacks can lead to a sustained downturn. I don’t think that’s the case now, however. Obviously the risk of rising interest rates was a culprit, but I think fundamentals will rule the day and that the recovery is sustainable,” said Mark Martiak, senior wealth strategist at Premier Wealth/First Allied.
“We’ll definitely see more volatility, but I don’t think it’ll be as abrupt or violence as what we saw, and as far as inflation goes, we’re still a long way from the danger point, before corporate earnings are impacted,” he said.
Wayne Kaufman, chief market analyst at Phoenix Financial Services, said the S&P has risen at least 1% in four of the past five sessions, a rally he called “tremendous.” He added, “we’ve seen a relentless move that took us to a level where we were marginally overbought, as the S&P bumped up against its 20-day moving average and fell back from that. But fundamentals remain strong and people are responding to that.”
What other data are in focus
Construction on new homes in the U.S., known as housing starts, jumped almost 10% in January to an annual rate of 1.33 million. That is the second highest level since the 2007-09 recession and it easily exceeded the 1.24 million forecast of economists polled by MarketWatch.
The University of Michigan said its consumer-sentiment index rose more than expected to a reading of 99.9 in February, up from 95.7 in January and the second-highest level in 14 years.
What stocks are active?
Coca-Cola Co. shares KO, +0.45% rose 0.5% after the beverage company reported fourth-quarter adjusted per-share earnings and sales that beat expectations.
Campbell Soup Co. shares CPB, -3.21% fell 3.2%. The food maker’s fiscal second-quarter adjusted earnings and sales outstripped expectations, but Chief Executive Denise Morrison said the quarter was disappointing, with continued challenges for U.S. soup and Campbell Fresh.
U.S. Steel Corp. X, +14.77% surged 15% while AK Steel Holdings Corp.AKS, +13.74% climbed about 14%. The rally came after the Commerce Department recommended tariffs on major metal imports, including a 24% tariff on steel imports from all countries. The SPDR S&P Metals & Mining ETF XME, +2.49% jumped 2.6%.
What other assets are in focus?
The dollar pared earlier losses, with the ICE U.S. Dollar Index DXY, +0.52% turning 0.6% higher, though still set for solid weekly losses. Oil futures CLH8, +0.44% rose 34 cents, or 0.6%, to end at $61.68 a barrel. and gold GCG8, -0.33% edged higher to settle at $1,356.20 an ounce, booking its best weekly climb since April of 2016.