Bargain Hunting Contributes To Higher Close On Wall Street - U.S. Commentary

(RTTNews) - While buying interest waned as the day progressed, stocks managed to end the trading session on Friday mostly higher. The buying interest on the day came on the heels of the downtrend shown by the markets over the past few weeks.

The tech-heavy Nasdaq finished the session sharply higher, while the Dow and the S&P 500 posted more moderate gains. The Nasdaq surged up 57.03 points or 1.2 percent to 4,769.56, the Dow rose 65.54 points or 0.4 percent to 17,500.94 and the S&P 500 climbed 12.28 points or 0.6 percent to 2,052.32.

With the gains on the day, the major averages turned in a mixed performance for the week. While the Dow edged down by 0.2 percent, the Nasdaq jumped by 1.1 percent and the S&P 500 rose by 0.3 percent.

Bargain hunting contributed to the strength on Wall Street, as some traders pick up stocks at reduced levels following the recent weakness.

The losses posted in the previous session dragged the Dow and the Nasdaq down to two-month closing lows, while the S&P 500 hits its lowest closing level in well over a month.

Concerns about the outlook for monetary policy and the possibility that the Federal Reserve may raise interest rates next month have recently weighed on the markets.

The minutes of the Fed's April meeting said most participants determined it would likely be appropriate to raise rates in June if incoming data supports such a move.

Economic data is subsequently likely to be in focus in the weeks leading up to the central bank's next monetary policy meeting on June 14th and 15th.

The National Association of Realtors released a report this morning showing that existing home sales rose for the second consecutive month in April.

NAR said existing home sales climbed 1.7 percent to an annual rate of 5.45 million in April after jumping 5.7 percent to an upwardly revised 5.36 million in March. Economists had expected existing home sales to rise by about 1.3 percent.

Reports on new home sales, international trade, and durable goods orders are likely to attract attention next week along with a speech by Fed Chair Janet Yellen.

Sector News

Semiconductor stocks showed a substantial move to the upside on the day, driving the Philadelphia Semiconductor Index up by 3.2 percent. With the gain, the index reached its best closing level in almost a month.

Applied Materials (AMAT) led the semiconductor sector higher, jumping by 13.8 percent after reporting better than expected second quarter results and providing upbeat guidance.

Considerable strength was also visible among electronic storage stocks, as reflected by the 3 percent gain posted by the NYSE Arca Disk Drive Index. The index continued to recover after hitting a seven-year closing low last Thursday.

Oil service stocks also saw significant strength, resulting in a 2.2 percent jump by the Philadelphia Oil Service Index. The strength in the sector came in spite of a decrease by the price of crude oil.

Biotechnology, telecom, brokerage, and housing stocks also showed strong moves to the upside, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index rose by 0.5 percent, while Hong Kong's Hang Seng Index advanced by 0.8 percent.

European stocks also rebounded strongly after seeing considerable weakness in the previous session. While the French CAC 40 Index jumped by 1.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index both surged up by 1.7 percent.

In the bond market, treasuries ended the day nearly flat after recovering from early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.849 percent.

Looking Ahead

As mentioned above, next week will see the release of several key economic reports that could impact the outlook for interest rates.

Traders are also likely to keep an eye on earnings news from companies such as Best Buy (BBY), Toll Brothers (TOL), Costco (COST), Hewlett Packard Enterprises (HPE), and HP Inc. (HPQ).