Investing.com -- U.S. stocks were mixed on Friday as investors reacted to the highest annual increase in core inflation in more than three years and a slight drop in oil prices, placing the brakes on February's enormous rally.
On Friday morning, the U.S. Commerce Department reported that its Personal Consumption Expenditure (PCE) Index jumped by 1.3% in January from its level 12 month earlier, an improvement of 0.7 from December's reading. The Core PCE Index, which strips out volatile food and energy prices, rose by 0.3% from the previous month, extending monthly gains from December. On a yearly basis, Core PCE surged by 1.7% from its level in January, 2015, also 0.3% higher from December's reading. Separately, the Commerce Department upwardly revised Real GDP growth in the fourth quarter to 1.0%, from initial estimates of 0.7%.
While the strong economic data could provide a boost to the major indices, it also bolstered the chances the Federal Reserve could raise short-term interest rates in the coming months as Core PCE inflation moves toward its targeted goal of 2%.
Any rate hikes this year are viewed as bearish for stocks, as investors exit their positions in equities in favor of higher yields in bond markets.
The Dow Jones Industrial Average lost 58.82 or 0.35% to 16,638.47, while the NASDAQ Composite index added 8.26 or 0.18% to 4,590.47, amid gains among technology and pharmaceutical stocks. The S&P 500 Composite index, meanwhile, fell 3.67 or 0.19% to 1,948.04, as six of 10 sectors closed in the red. Stocks in the Basic Materials industry led, while stocks in the Utilities sector lagged. The Dow and S&P 500 turned negative late in the session after crude futures pared earlier gains on Friday afternoon.
Despite the slight losses, the major indices gained roughly 2% on the week. U.S. stocks have responded to a massive sell-off over the first six weeks of 2016, with one of their strongest two-week rallies over the last year.
The top performer on the Dow was EI du Pont de Nemours and Company (N:DD), which added 1.19 or 1.97% to 61.61. DuPont finished just above Boeing Company (N:BA), which gained 1.66 or 1.42% to 118.48, amid heavy short covering late in the session. Earlier, Forbes reported that the aircraft manufacturer replaced Wal-Mart Stores Inc (N:WMT) as the 13th highest shorted component on the Dow. Boeing (N:BA)'s shares retreated earlier in the week after its chief rival Airbus reported a surge in new orders for the first quarter.
Coca-Cola Company (N:KO) finished as the worst performer after losing 2.31% to 43.14, following a late sell-off. Coca-Cola finished just below Wal-Mart, which fell sharply amid reports from the Wall Street Journal that the world's largest retailer cut more than 100 jobs from its corporate office in Bentonville, Arkansas this week. Shares in Wal-Mart lost 1.47 ot 2.15% to close at 66.58.
The biggest gainer on the NASDAQ was Baidu Inc (O:BIDU), which surged 16.08 or 10.16% to 174.30, after the Chinese search engine posted better than expected earnings with its fourth quarter results.The worst performer was Intuit Inc (O:INTU), which lost 4.22 or 4.22% to 95.85, falling off one-month highs from Thursday's session. The California-based tax preparation software company surged above 100 a session earlier, after beating quarterly expectations amid rising demand ahead of April's filing deadline.
The top performer on the S&P 500 was Marathon Oil Corporation (N:MRO), which gained 0.64 or 8.59% to 8.03. A bevy of energy companies were among the top performers on the S&P, as Ensco, Transocean and CHK all closed up by more than 5%. The worst performer was Southwestern Energy Company (N:SWN), which fell 0.38 or 5.61% to 6.39. Shares in Southwestern Energy are down by more than 75% over the last year.
On the New York Stock Exchange, advancing issues outnumbered declining ones by a 1,871-1,168 margin.
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