After showing a lack of direction early in the session, stocks moved higher throughout the trading day on Friday. The major indices firmly entered positive territory, recovering from initial fluctuations around the unchanged line in early trading.
Although the major indices pulled back from their highest points late in the day, they still closed modestly higher. The Dow gained 96.70 points, or 0.2%, to reach 40,659.76. Similarly, the Nasdaq rose 37.22 points, or 0.2%, to 17,631.72, and the S&P 500 climbed 11.03 points, or 0.2%, to 5,554.25.
For the week, the Nasdaq surged by 5.3%, the S&P 500 increased by 3.9%, and the Dow advanced by 2.9%.
The emergent strength on Wall Street could be attributed to recent upward momentum, with the major indices extending the bullish trend seen in recent sessions.
Notably, the Nasdaq and the S&P 500 closed higher for the seventh consecutive session, more than offsetting the steep drop experienced earlier this month.
The buying interest was further fueled by recent data that alleviated concerns about the economic outlook and bolstered confidence that the Federal Reserve might cut interest rates next month.
Although yesterday's positive retail sales data has decreased the likelihood of a 50 basis point rate cut, the Fed is still widely expected to reduce rates by at least 25 basis points.
In U.S. economic news, preliminary data from the University of Michigan showed a higher-than-expected improvement in consumer sentiment for August. The consumer sentiment index rose to 67.8 in August from 66.4 in July, surpassing economists' expectations of a slight increase to 66.9.
This rise in consumer sentiment followed the index's drop to its lowest level since November 2023 in the previous month.
Regarding inflation, the report indicated that both year-ahead and long-term inflation expectations remained unchanged from the prior month at 2.9% and 3.0%, respectively.
Meanwhile, a report from the Commerce Department highlighted a significant decline in new residential construction for July. Housing starts plunged by 6.8% to an annual rate of 1.238 million after increasing by 1.1% to a revised rate of 1.329 million in June. Economists had predicted a decline of 1.7% to an annual rate of 1.330 million.
This sharp drop brought housing starts to their lowest level since May 2020, which recorded an annual rate of 1.053 million.
Building permits also saw a sharp decrease of 7.0% to an annual rate of 1.396 million in July after rising by 3.9% to a revised rate of 1.454 million in June. Permits, which indicate future housing demand, were expected to decrease by 1.1% to an annual rate of 1.430 million.
### Sector News
Gold stocks performed significantly higher, leading to a 3.0% surge in the NYSE Arca Gold Bugs Index, driven by a substantial increase in gold prices.
Telecom stocks also showed considerable strength, with the NYSE Arca North American Telecom Index increasing by 1.3%.
Banks and networking stocks also experienced notable gains, while airline stocks retraced some of their previous session's gains.
### Other Markets
Internationally, stock markets in the Asia-Pacific region saw substantial gains on Friday. Japan's Nikkei 225 Index spiked by 3.6%, and Hong Kong's Hang Seng Index jumped by 1.9%.
In contrast, Europe's major markets had a mixed performance. The U.K.'s FTSE 100 Index fell by 0.4%, while France's CAC 40 Index and Germany's DAX Index rose by 0.4% and 0.8%, respectively.
In the bond market, treasuries regained ground after a sharp pullback in the previous session, with the yield on the benchmark ten-year note falling 3.4 basis points to 3.892%.
### Looking Ahead
Following a week rich in key data releases, the U.S. economic calendar is relatively quiet next week. Nonetheless, traders are likely to focus on the minutes of the latest Federal Reserve meeting and comments from Fed officials at the Jackson Hole Economic Policy Symposium.
