Following a significant rise in the previous session, stocks demonstrated a lack of clear direction on Friday. The major indices oscillated across the unchanged line throughout the trading day.
As it stands, the major indices are reporting modest declines. The Dow has decreased by 34.75 points or 0.1 percent to 40,528.31. The Nasdaq has fallen by 32.06 points or 0.2 percent to 17,562.44, and the S&P 500 has reduced by 8.49 points or 0.2 percent to 5,534.73.
This indecisive trading is attributed to traders' uncertainty regarding the market's short-term prospects following a recent robust performance, where the Nasdaq and the S&P 500 posted gains for six consecutive sessions.
The recent upward trend has largely counterbalanced the early month sell-off, although indices remain substantially below the record highs set in July.
Traders are likely contemplating the next potential catalyst for the markets. Recent data has alleviated concerns about the economic outlook, while bolstering confidence that the Federal Reserve will lower interest rates next month.
While upbeat retail sales data from yesterday diminished the likelihood of a 50 basis point rate cut, the Federal Reserve is still broadly expected to reduce rates by at least 25 basis points.
In U.S. economic news, preliminary data from the University of Michigan indicated a stronger-than-expected improvement in consumer sentiment for August.
The University's consumer sentiment index rose to 67.8 in August, up from 66.4 in July. Economists had anticipated the index to edge up to 66.9.
This recovery in consumer sentiment follows a dip to its lowest point since November 2023 in the previous month.
On the inflation front, the report stated that both year-ahead and long-term inflation expectations remained unchanged from the previous month, at 2.9 percent and 3.0 percent, respectively.
Simultaneously, the Commerce Department reported a significant downturn in new residential construction for July.
Housing starts plummeted by 6.8 percent to an annual rate of 1.238 million in July, following a 1.1 percent rise to a revised rate of 1.329 million in June.
Economists had predicted a 1.7 percent decline in housing starts, to an annual rate of 1.330 million from the initially reported 1.353 million for the previous month.
This sharp decrease saw housing starts fall to their lowest level since reaching an annual rate of 1.053 million in May 2020.
The Commerce Department also noted a 7.0 percent drop in building permits to an annual rate of 1.396 million in July, after a 3.9 percent rise to a revised rate of 1.454 million in June.
Building permits, which are a predictor of future housing demand, were expected to decrease by 1.1 percent, to an annual rate of 1.430 million from the 1.446 million originally reported for the previous month.
Sector News
Most major sectors exhibited only slight movements, contributing to the overall market's tepid performance.
However, gold stocks experienced a significant uptick, with the NYSE Arca Gold Bugs Index climbing by 1.2 percent.
The strength in gold stocks is attributed to the surge in gold prices for December delivery, which rose by $30.70 to $2,523.10 per ounce.
Conversely, airline and semiconductor stocks are retreating after leading the market's performance on Thursday.
Other Markets
In international trading, stock markets across the Asia-Pacific region saw substantial gains on Friday. Japan's Nikkei 225 Index surged by 3.6 percent, while Hong Kong's Hang Seng Index increased by 1.9 percent.
Meanwhile, major European markets displayed mixed performance. The U.K.'s FTSE 100 Index dropped by 0.3 percent, whereas France's CAC 40 Index rose by 0.2 percent, and Germany's DAX Index increased by 0.7 percent.
In the bond market, treasuries are recovering following the previous session's sharp decline. Consequently, the yield on the benchmark ten-year note, which moves inversely to its price, is down by 2.2 basis points, reaching 3.904 percent.
