Stocks End the Week With a Gain Ahead of Labor Day

On Friday, the S&P 500 index exhibited resilience, concluding the week with its most robust performance since June. The broad index displayed a modest gain of 0.2%, while the Dow Jones Industrial Average made a commendable addition of approximately 115 points, equating to a 0.3% rise. The Nasdaq Composite, meanwhile, experienced a marginal decline of less than 0.1%.

‍

For the week in its entirety, the S&P 500 demonstrated noteworthy progress, advancing by 2.5%. The Dow and Nasdaq, too, posted significant gains of 1.4% and 3.2%, respectively, marking their most prosperous weeks since July.

‍

Investor attention was squarely focused on the August jobs report as they approached a holiday weekend. Initially, all three major indexes experienced upward momentum on Friday, stimulated by the report's implications that the economy might be cooling sufficiently to dissuade the Federal Reserve from implementing further interest-rate hikes. Notably, the unemployment rate experienced an increase to 3.8% in August, diverging from the expectation of a steady 3.5%. Concurrently, average hourly earnings rose by 4.3% in August compared to the prior year, a figure slightly below July's and beneath the forecasted level.

‍

Leslie Thompson, Chief Investment Officer of Spectrum Wealth Management, remarked, "Everything's keyed into numbers related to inflation and ultimately what the path of the Fed is going to be."

‍

Despite the initial positive trajectory, the indexes retreated from their intraday highs, primarily influenced by declines in mega-cap technology stocks. Tesla, for instance, saw a 5.1% dip following the announcement of a new vehicle with a price tag steeper than analysts had anticipated. In a similar vein, Nvidia experienced a 1.7% pullback after rival chip maker Broadcom's revenue forecast for the current quarter aligned precisely with analysts' expectations.

‍

Within the bond market on Friday, the benchmark 10-year U.S. Treasury yield experienced fluctuations, ultimately concluding the day at 4.173%, compared to 4.090% on the previous day. This yield movement reflects the inverse relationship between bond prices and yields, where yields rise as bond prices fall.

‍

Market participants attributed the day's somewhat unsettled trading to diminished activity due to the holiday season, as investors took time off. Notably, U.S. markets were scheduled to be closed on Monday for the Labor Day holiday. Jack McIntyre, Portfolio Manager for Brandywine Global, commented, "Trades in a thinner market can get exaggerated."

‍

Entertainment companies faced challenges on Friday following a dispute between Charter and Walt Disney, which raised concerns regarding the future of the cable-television business model. Consequently, shares of Charter experienced a 3.6% dip, while Disney shares declined by 2.4%. Other entities, including Warner Bros. Discovery, Paramount Global, Fox, and Comcast, also witnessed retractions.

‍

Conversely, Dell Technologies exhibited an impressive rally of 21% after surpassing earnings expectations and providing an optimistic outlook.

‍

In contrast, the consumer-staples sector represented the weakest performer within the S&P 500 on Friday. Walgreens Boots Alliance recorded a significant decline of 7.4% following the departure of the pharmacy operator's Chief Executive. It's notable that stocks concluded a lackluster month of trading, even with a late-August rally. Investors remained in a contemplative mode, assessing the sustainability of the stock market's ascent while considering alternative high-yield options provided by safer, cash-like instruments.

‍

Historically, September has been characterized as the least favorable month for U.S. stocks. Data from Dow Jones Market Data indicates that dating back to 1928, the S&P 500 has registered an average decline of 1.1% in September.

‍

Jake Jolly, Head of Investment Analysis at Bank of New York Mellon's investment management division, remarked, "We're getting through that summer lull. Seasonality isn't playing in our favor this coming month."

‍