Stocks Post Modest Gains To Extend Winning Streak To Four Days - U.S. Commentary

(RTTNews) - While trading activity was somewhat subdued ahead of the long weekend, stocks managed to end Friday's trading day modestly higher. The gains on the day extended the substantial rally seen over the course of the three previous sessions.

The major averages ended the day in positive territory but well off their best levels of the session. The Dow inched up 19.38 points or 0.1 percent to 17,949.37, the Nasdaq rose 19.89 points or 0.4 percent to 4,862.57 and the S&P 500 edged up 4.09 points or 0.2 percent to 2,102.95.

The four-day winning streak led to strong gains for the week. The Dow surged up by 3.1 percent, the S&P 500 jumped by 3.2 percent and the Nasdaq soared by 3.3 percent.

The modestly higher close on Wall Street came as stocks continued to recover from the sell-off that was seen in reaction to Britain's vote to leave the European Union.

Concerns about the impact of the so-called Brexit continue to linger, although traders seem optimistic that the U.S. economy will not be seriously hurt.

Buying interest was also generated by the release of a report from the Institute for Supply Management showing a much bigger than expected increase by its index of U.S. manufacturing activity.

The ISM said its purchasing managers index jumped to 53.2 in June from 51.3 in May, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to inch up to 51.5.

With the bigger than expected increase, the ISM's manufacturing index rose to its highest level since reaching 53.3 in February of 2015.

Rob Carnell, Chief International Economist at ING Commercial Banking, said the number is consistent with a decent but not amazing pace of manufacturing growth.

Nonetheless, trading activity waned as the day progressed, as some traders looked to get a head start on the Fourth of July weekend.

Among individual stocks, Netflix (NFLX) moved notably higher after Canaccord Genuity initiated coverage of the company's stock with a Buy rating and a price target of $120.

On the other hand, Micron Technology (MU) fell sharply after the memory chip maker reported a narrower than expected third quarter loss but on weaker than expected revenues.

Sector News

Gold stocks turned in some of the market's best performances on the day, resulting in a 5 percent jump by the NYSE Arca Gold Bugs Index. With the gain, the index reached its best closing level in almost three years.

The strength among gold stocks came amid a sharp increase by the price of the precious metal, with gold for August delivery surging up $18.40 to $1,339 an ounce.

Considerable strength was also visible among steel stocks, as reflected by the 2.6 percent advance by the NYSE Arca Steel Index. The gain lifted the index to a two-month closing high.

Biotechnology stocks also showed a significant moves to the upside, driving the NYSE Arca Biotechnology Index up by 2.5 percent. Alnylam (ALNY) and Cepheid (CPHD) posted standout gains.

Energy and transportation stocks also saw notable strength on the day, while weakness among electronic storage and banking stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index advanced by 0.7 percent, while China's Shanghai Composite Index inched up by 0.1 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index surged up by 1.1 percent, the German DAX Index jumped by 1 percent and the French CAC 40 Index climbed by 0.9 percent.

In the bond market, treasuries pulled back well off their best levels but finished the session higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.2 basis points to 1.456 percent after hitting a low 1.414 percent.

Looking Ahead

Traders may keep a close eye on developments overseas next week, although the Labor Department's monthly jobs report is also likely to be in focus.

Reports on trade and service sector activity may also attract attention along with the minutes of the latest Federal Reserve meeting.