Stocks Extend Recent Uptrend With Modestly Higher Close - U.S. Commentary

(RTTNews) - Following the rally seen late in the previous session, stocks saw some further upside during trading on Friday. While buying interest was somewhat subdued on the day, the Dow and the S&P 500 reached their best closing levels in over a month.

The major averages posted modest gains but closed off their highs for the session. The Dow edged up 33.74 points or 0.2 percent to 17,084.49, the Nasdaq rose 19.68 points or 0.4 percent to 4,830.47 and the S&P 500 inched up 1.46 points or 0.1 percent to 2,014.89.

Reflecting the upward trend seen over the past few days, the major averages all moved notably higher for the week. The Dow soared by 3.7 percent, while the S&P 500 jumped by 3.3 percent and the Nasdaq surged up by 2.6 percent.

The modest strength on Wall Street came as traders continued to react positively to yesterday's release of the minutes of the latest Federal Reserve meeting.

The minutes showed that Fed members were concerned about global growth risks and decided it was prudent to wait for additional information before raising interest rates. Combined with recent jobs and trade data, the minutes helped reinforce the view that the Fed will not raise rates later this month and may delay its first rate hike into next year.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "Admittedly, there are still two employment reports scheduled for release before the FOMC meets in December."

"But at this stage we think it would take a major turnaround in payroll growth, to well above 200,000 per month, to persuade officials to support a December rate hike," he added.

Nonetheless, traders seemed somewhat reluctant to make any significant moves ahead of the release of earnings news from a number of big name companies next week.

Johnson & Johnson (JNJ), Intel (INTC), JP Morgan (JPM), Bank of America (BAC), General Electric (GE), Citigroup (C), and Netflix (NFLX) are among the companies due to report their results.

Aluminum giant Alcoa (AA) unofficially kicked off the earning season after the close of trading on Thursday, reporting third quarter results that came in below analyst estimates.

Sector News

Many of the major sectors ended the day showing only modest moves, although substantial strength was visible among gold stocks. The NYSE Arca Gold Bugs Index surged up by 6.2 percent to a nearly three-month closing high.

The rally by gold stocks came amid an increase by the price of the precious metal, with gold for December delivery climbing $11.60 to $1,155.90 an ounce.

Airline stocks also turned in a strong performance, resulting in a 2.8 percent gain by the NYSE Arca Airline Index. United Continental (UAL) helped lead the sector higher after raising its third quarter profit margin forecast.

Steel, biotechnology, and trucking stocks also saw notable strength on the day, while brokerage and natural gas stocks moved to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably higher during trading on Friday. Japan's Nikkei 225 Index surged up by 1.6 percent, while China's Shanghai Composite Index jumped by 1.3 percent.

The major European markets also moved to the upside on the day. While the German DAX Index advanced by 1 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index climbed by 0.7 percent and 0.5 percent, respectively.

In the bond market, treasuries showed a lack of direction throughout the trading session before closing slightly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slipped nearly a basis point to 2.099 percent.

Looking Ahead

As mentioned above, earnings news is likely to attract significant attention next week, with the results potentially setting the tone for the rest of the reporting season.

Traders are also likely to keep a close eye on reports on retail sales, consumer and producer price inflation, and industrial production as well as the Fed's Beige Book.