Wall Street apartment with the Fed in focus
By Ambar Warrick and Devik Jain
(Reuters) – U.S. stock indices were flat on Friday as attention turned to next week’s Federal Reserve meeting, while sectors exposed to technology and growth advanced after data from inflation have allayed fears of a long-term surge in consumer prices.
The S&P 500 traded just below a record 4,249.74 with tech-heavy stocks providing the biggest boost. Sectors such as financials and basic resources, which are expected to benefit from an economic rebound this year, also supported the index.
“We will continue to recommend a diversified equity allocation with a barbell approach that has growth exposure on one side and economy-sensitive cyclical exposure on the other,” wrote Art Hogan, chief strategist of markets at National Securities in New York, in a note. .
Investors have lowered their expectations of an anticipated Fed policy tightening after May consumer price data suggested that a recent spike in inflation would be transitory.
Much of the price spike in May came from items such as commodities and airline tickets and is expected to be temporary.
A survey also showed that US consumer confidence improved in early June, as markets lowered their inflation expectations this year.
With recent data also pointing to weakness in the labor market, the Fed is expected to largely maintain an accommodative policy at its meeting next week, which is positive for stocks and other risky assets.
“The macroeconomic news continues to play out positively and we are seeing the market rise,” said Peter Cardillo, chief markets economist at Spartan Capital Securities in New York.
“Investor enthusiasm continues and yesterday’s S&P near new record territory suggests a summer rally is underway… but I don’t expect a runaway increase,” Cardillo said.
At 12:02 p.m. ET, the Dow Jones Industrial Average was down 60.11 points, or 0.17%, to 34,406.13 and the S&P 500 was down 1.78 points, or 0.04%, at 4,237.40. The Nasdaq Composite was up 7.14 points, or 0.05%, to 14,027.47.
Health actions <.spxhc> fell 1.1% and were among the worst performing S&P sectors amid mounting criticism of the controversial US Food and Drug Administration approval of an Alzheimer’s drug developed by Biogen Inc.
The S&P 500 and Nasdaq were expected to post slight weekly gains as a lack of major catalysts and a summer lull in trading caused them to move in a narrow range.
But weakness in major industrial stocks saw the Dow Jones expect a weekly loss amid doubts about whether President Joe Biden’s $ 2.3 trillion infrastructure spending plan would pass.
The S&P Industrials sector was flat on Friday and is expected to lose for the week.
Cruise operators fell, with Royal Caribbean Group losing 0.4% after two guests from its Celebrity Millennium ship tested positive for COVID-19.
Preferred stocks by small retail investors that have dominated trading volumes in recent weeks are expected to close higher for the week, even as a rally appeared to be winding down on Thursday. Most so-called “meme” stocks rose on Friday.
Rising issues outnumbered declines by a 1.36-to-1 ratio on the NYSE and by a 1.30-to-1 ratio on the Nasdaq.
The S&P Index recorded 26 new 52-week highs and a new low, while the Nasdaq recorded 83 new highs and 10 new lows.
(Reporting by Ambar Warrick and Devik Jain in Bangalore; editing by Maju Samuel)