Stocks Close Mostly Higher Following Lackluster Trading Day - U.S. Commentary

(RTTNews) - After turning in a lackluster performance for much of the session, stocks ended Friday's trading mostly higher. The gains on the day extended the strong upward trend that has been shown by the markets over the past few weeks.

The major averages all ended the day in positive territory, although the Dow posted only a modest gain. While the Dow inched up 3.38 points or less than a tenth of a percent to 15,464.30, the Nasdaq advanced 21.78 points or 0.6 percent to 3,600.08 and the S&P 500 climbed 5.17 points or 0.3 percent to 1,680.19.

For the week, the major averages all posted substantial gains. The Nasdaq soared by 3.5 percent, while the S&P 500 jumped by 3 percent and Dow surged up by 2.2 percent.

The strength that emerged on Wall Street reflected the recent upward move momentum for the markets, which has lifted the Dow and the S&P 500 to new record closing highs. The Nasdaq also reached its best closing level in almost thirteen years.

Positive sentiment was also generated by better than expected earnings news from financial giants JP Morgan (JPM) and Wells Fargo (WFC).

JP Morgan reported second quarter earnings of $1.60 per share compared to analyst estimates of $1.44 per share, while Wells Fargo reported second quarter earnings of $0.98 per share versus estimates of $0.93 per share. Both companies also reported revenues that exceeded estimates.

Nonetheless, buying interest was somewhat subdued amid lingering uncertainty about the outlook for the Federal Reserve's stimulus program.

The choppy trading seen for much of the session came following the release of a report from the Labor Department showing a bigger than expected increase in producer prices in the month of June.

The Labor Department said its producer price index rose by 0.8 percent in June following a 0.5 percent increase in May. Economists had been expecting the price growth to match the increase seen in the previous month.

Excluding food and energy prices, core producer prices edged up by 0.2 percent in June after inching up by 0.1 percent in May. Core prices had been expected to tick up by 0.1 percent.

A separate report from Thomson Reuters and the University of Michigan showed a modest deterioration in consumer sentiment in the month of July.

Among individual stocks, shares of UPS (UPS) came under pressure after the delivery giant forecast weaker than expected second quarter earnings. UPS ended the day down by 5.8 percent.

Aerospace giant Boeing (BA) also saw significant weakness on the day, helping to limit the upside for the Dow. Shares of Boeing fell by 4.7 percent following news a fire that broke out on one of the company's Dreamliner airplanes at London's Heathrow Airport.

Meanwhile, shares of WebMD (WBMD) surged up by 25.5 percent after the health information services provider raised its full-year guidance.

Sector News

Biotechnology stocks showed a strong move to the upside over the course of the session, driving the NYSE Arca Biotechnology Index up by 2.5 percent. With the gain, the index reached a new record closing high.

Alexion Pharmaceuticals (ALXN) helped to lead the biotech sector higher, surging up by 12.6 percent on the heels of a report from Bloomberg News indicating that Roche (RHHBY) is seeking financing for a potential takeover of the company.

Significant strength also emerged among electronic storage stocks, as reflected by the 1.4 percent gain posted by the NYSE Arca Disk Drive Index. The gain lifted the index to its best closing level in well over a year.

Banking stocks also turned in a strong performance on the heels of the news from JP Morgan and Wells Fargo, resulting in a 1.3 percent gain by the KBW Bank Index. Telecom and oil service also saw notable strength on the day.

Meanwhile, gold stocks came under pressure, giving back some ground after ending the previous session sharply higher. The NYSE Arca Gold Bugs Index fell by 2.5 percent, partly offsetting the 7.9 percent gain posted on Thursday.

Steel stocks also gave back some ground, with the NYSE Arca Steel Index dropping by 1.9 percent after ending Thursday's trading up by 4 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index edged up by 0.2 percent, while Hong Kong's Hang Seng Index ended the day down by 0.8 percent.

The major European markets also ended the day mixed. While the French CAC 40 Index fell by 0.4 percent, the German DAX Index rose by 0.7 percent and the U.K.'s FTSE 100 Index closed just above the unchanged line.

In the bond market, treasuries turned lower over the course of the session after seeing early strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.7 basis points to 2.601 percent after hitting a low of 2.52 percent.

Looking Ahead

The outlook for the Fed's stimulus program is likely to remain in focus next week, as Fed Chairman Ben Bernanke is due to testify before both the House Financial Services Committee and the Senate Banking Committee.

Economic data is also likely to attract attention, with traders likely to keep a close eye on reports on retail sales, industrial production, housing starts, and consumer prices.

On the earnings front, Citigroup (C), Coca-Cola (KO), Goldman Sachs (GS), American Express (AXP), Bank of America (BAC), Intel (INTC), IBM (IBM), Google (GOOG), Microsoft (MSFT), and Verizon (VZ) are among the slew of big-name companies scheduled to release their quarterly results next week.