Investing.com – A barrage of better-than-expected data on the U.S. economic growth and consumption on Friday made investors cringe throughout the session with the major indices paring gains on worries that the good news would add support for rate hikes by the Federal Reserve.
The blue-chip Dow showed the most uncertainty, swinging from black to red after a starting the day with gains. At 16:49GMT or 11:49AM ET, the Dow 30 edged up 8 points or 0.05%, while the S&P 500 traded up 4 points or 0.23% while the tech-heavy NASDAQ Composite gained 13 points or 0.28%.
The balance of U.S. economic data was positive on Friday showing better than expected growth in the economy with a consumer that was more optimistic and willing to spend more.
The second estimate of fourth-quarter GDP was revised upward to quarter-on-quarter growth of 1.0%, beating expectations for a downward revision to 0.4%.
Additionally, a U.S. Bureau of Economic Analysis report showed that personal spending ramped up a seasonally adjusted 0.5% in January, compared to the consensus forecast for a 0.3% rise.
The final reading of the University of Michigan’s consumer sentiment also showed buyer confidence rose to 91.7 in February, beating expectations for a reading of 91.0.
Each positive reading seemed to pare the gains in U.S. stocks as investors appeared to read the good economic news as support for the Fed to embark on more rate hikes in 2016.
Indeed, Cleveland Fed president Loretta Mester said on Friday that the underlying U.S. economy remains strong and that an increase in interest rates at the next policy decision meeting should remain in the cards.
According to this FOMC member (with the right to vote), the final decision would depend on the data “but my forecasts, and the risks around those forecasts, suggest we still want to see gradually rising interest rates,” Mester told Bloomberg in an interview. “March should be on the table. We want to have a full discussion of the options.”
Fed governor Jerome Power also stated on Friday that the fact that the central bank’s decisions were data-driven was “likely to surprise markets from time to time”.
San Francisco Fed president John Williams gave no indication of the future path of price of money in a monetary policy forum, but limited himself to stating that forward guidance can be a powerful tool.
Lael Brainard, another Fed governor, will speak on a panel discussing international monetary policy synchronization at 18:30GMT or 13:30ET.
Meanwhile, crude continued to move more or less hand-in-hand with U.S. stock markets. Though oil traded in the black throughout the session, it was also subjected to volatility. The barrel of West Texas broke above $34 only to pare gains as investors weighed the possible of a March agreement on a production cap against persistent concerns of a supply glut.
Crude oil futures for April delivery on the New York Mercantile Exchange rose $0.34, or 1.03%, to trade at $33.40a barrel by 16:50GMT, or 11:50AM ET, while Brent oil advance $0.74 or 2.10% to $36.03.
Finally, in large market moves from earnings, JC Penney Company Inc Holding (N:JCP), Kraft Heinz Co (O:KHC) and Baidu Inc (O:BIDU)surged, while investors sold off Gap Inc (N:GPS), Weight Watchers International Inc (N:WTW), Foot Locker (N:FL) and Sotheby`s (N:BID).
While the Dow and S&P were on track to post a second week of gains in Friday’s session, investors will have a full calendar of economic data next week, climaxing in the monthly jobs report seven days from today.