S&P 500 is hovering close to a document as a benchmark to shut a profitable week
US stocks fluctuated on Friday, with the S&P 500 briefly adding to its new record as Wall Street looked to end the week on a good close.
The S&P 500 traded near the flatline after closing on a record in the previous session, the first record since May 7th. The Nasdaq Composite gained 0.2% while Apple, Tesla and Netflix all traded in the green. The Dow Jones Industrial Average canceled previous gains and fell 80 points.
The market tried to build on Thursday’s gain as investors shook off a report that inflation had risen as fast as it had since 2008. The consumer price index rose 5% yoy in May, a little faster than expected.
“Although the May CPI report was above estimates, the market was not too surprised and was viewing the data as temporary for now,” said Craig Johnson, technical marketing strategist at Piper Sandler. “The treasury market appeared to be okay with the temporary inflation outlook.”
Perhaps the bond market’s reaction to the hot inflation reports has boosted stocks. The 10-year government bond yield fell to a three-month low of 1.44% on Friday after trading above 1.77% earlier in the year.
Tech companies tend to underperform in an environment of rising interest rates as higher interest rates lower the present value of expected cash flow for growth-oriented companies. Tech-heavy Nasdaq was the relative loser among major averages in 2021 as bond yields rose.
For the week, the main benchmarks are mixed. The Dow is down 1%, but the S&P 500 is up 0.2% and is in its third consecutive positive week. The Nasdaq Composite is the outperformer this week, up 1.5% so far and is about to post its fourth consecutive week of earnings.
Some of the meme stocks rebounded after a tough day on Thursday. AMC shares rose 10% and GameStop gained 4%. These two suffered double-digit percentage losses on Thursday as the momentum on Reddit favorites faded.
“The ups and downs of meme stocks have generally had little impact on the overall direction of the stock market,” said Peter Berezin, chief strategist at BCA Research, in a press release. “Still, the growing interest in meme stocks is positive for stocks in the medium term … This is because the meme stock phenomenon is pulling funds into the stock market, driving up prices and liquidity in the process.”