U.S. stocks finish lower on Friday but book weekly advance

At the close of trading on Friday, U.S. stock markets finished in the red, but saw an overall gain during the week. Despite the dip in values on the last day of trading, investors can take heart in the positive progress made over the past five days.

Table of Contents

• 1. U.S. Stocks End Week On Subdued Note
• 2. Wall Street Shrugs Off Friday Decline
• 3. Investors Look Ahead to Next Week’s Figures
• 4. Market Outlook Remains Optimistic Despite Recent Volatility
• Q&A

1. U.S. Stocks End Week On Subdued Note

U.S. stocks ended the week on a subdued note, with investors retreating from positions taken over the past few days. The S&P 500 and Nasdaq Composite pulled back after both indexes had marked fresh all-time highs on Wednesday.

The Dow Jones Industrial Average shed some 166 points, or 0.5%, to close at 33,815. The S&P 500 fell 0.4%, and the Nasdaq Composite declined 0.8%. Key market drivers included:

• Rising U.S. Treasury yields: The 10-year Treasury yield rose to 1.63% after closing out last week at 1.54%. Higher yields tend to weigh on stocks, and a move up in yields tends to draw money away from stocks.
• Rising oil prices: Oil prices rose, with West Texas Intermediate crude up more than 3%, settling at $63.97, and Brent crude gaining more than 2% to reach $67.69 a barrel. This created some headwinds for energy stocks.

2. Wall Street Shrugs Off Friday Decline

Friday’s poor performance on Wall Street was shrugged off today, as investors retreated from fears of a potential recession and refocused their attention onto more positive economic indicators. The S&P 500 and Nasdaq Composite indices both rose after closing down on Friday, setting the stage for a new week.

Indicators looked brighter globally, with the European Central Bank keeping interest rates on hold and China’s exports rising 7.2%, buoying hopes that the world economy may be stabilizing. Domestically, consumer sentiment is hardly flagging, with consumers showing continued willingness to spend in spite of an uncertain economic outlook. All of this combined to give Wall Street a boost:

• The S&P 500 rose 0.8%, reclaiming much of the ground it had lost the day before.
• The Nasdaq Composite rose 1%, with tech stocks once again leading the charge.
• The Dow Jones Industrial Average gained 0.4%.

Although stocks still remain in a volatile state, investors appeared to be gaining some confidence in the market’s resilience, something which could further buoy prices in the coming days.

3. Investors Look Ahead to Next Week’s Figures

Investors eagerly await the release of crucial economic data in the coming week. Comparing this week’s figures with previous months’ results can give valuable insight into the general state of the economy. Reports to be released next week include:

• GDP Figures
• Unemployment Rate
• Manufacturing Output
• Consumer Price Index

The GDP Figures will provide a roadmap for future economic activity. It’s an important indicator of the health of the economy, and is widely watched by investors. The Unemployment Rate will show the current state of the labor market. This is a critical element of determining the strength of the overall economy. The Manufacturing Output number will show how productive the industrial sector is. This will then inform analysts about how much confidence consumers have in the economy. Lastly, the Consumer Price Index tries to capture the overall inflation rate of the economy at a given time. Inflation can determine the strength of a currency relative to other nations.

4. Market Outlook Remains Optimistic Despite Recent Volatility

The last few weeks have seen volatility in the stock market, particularly among tech stocks. Thankfully, this has not dampened the outlook for the broader market, which continues to remain relatively stable. In particular:

• The S&P 500 index continues to approach an all-time high and is now within striking distance of its pre-pandemic level.
• The NASDAQ Composite has seen a drop from its all-time highs, but conditions remain more optimistic than earlier this year.
• The Dow Jones Industrial Average is currently undergoing an impressive streak of gains.

So even though the current market volatility has proven unpredictable for many individual stocks, the outlook for overall market performance remains positive. Financial professionals maintain that the broader economic conditions are ripe for ongoing growth.

Q&A

Q: What happened on the U.S. stock market on Friday?
A: U.S. stocks finished lower on Friday, but the market still posted an overall weekly advance.

Q: How did the market do this week?
A: This week, the market made gains, with all three major indices posting gains. The Dow Jones Industrial Average gained 1.03%, the S&P 500 jumped 1.27%, and the Nasdaq Composite rose 1.84%.

Q: What caused the market to decline on Friday?
A: On Friday, the market was weighed down by lingering concerns about the possibility of higher taxes for corporations and investors next year.

Q: Could the market turn around soon?
A: In the near future, market sentiment could be boosted by the outcome of negotiations between congressional Democrats and Republicans over economic relief legislation and the possibility of faster-than-expected COVID-19 vaccine distribution.

Despite the stock market slip on Friday, U.S. equities closed in the green for the week. Even with reports of decreased earnings in some companies, investors remain optimistic about the market’s future and are looking forward to the next week’s opening bell.