On Friday, US equity indexes experienced a positive trend, with observable gains in the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average after midday trading. This upward movement followed the release of a consumer sentiment gauge that exceeded expectations, indicative of the current presidential election dynamics impacting economic confidence. The Nasdaq Composite surged by 0.4%, reaching a level of 17,662.5, while the S&P 500 climbed 0.3% to 5,558.2, and the Dow Jones Industrial Average was also up by 0.3%, ending the day at 40,684.4.
Among the sectors, real estate noted the sharpest decline, contrasting with the gains observed in communication services and financial sectors during intraday trading. In economic indicators, the University of Michigan's preliminary consumer sentiment index reported an increase to 67.8 in August, rising from the previous month's figure of 66.4, surpassing the anticipated 66.9 as projected in a Bloomberg survey.
Survey participants reported one-year inflation expectations holding steady at 2.9%, consistent with July, while expectations for five-year inflation remained unchanged at 3% for the fifth consecutive month. Jefferies Senior Economist Thomas Simons commented on the sentiment rebound, describing it as "politically charged." He pointed out that President Joe Biden's performance in a recent debate negatively influenced the perception during the period when data was collected for July. Adding to the market dynamics, the CBOE Volatility Index (VIX) saw a decline of 3.2%, settling at 14.74, continuing its descent from the significantly elevated levels witnessed recently.
The previous Thursday revealed retail sales growth occurring at more than double the rates forecasted for July. This alleviated concerns regarding a potential significant economic slowdown, a sentiment supported by inflation data indicating that price pressures are easing, suggesting a moderate economic landing, which may prompt the Federal Reserve to make cuts to interest rates rather than aggressive reductions. Moreover, in housing market developments, July saw a decline in housing starts of 6.8%, marking a seasonally adjusted annual rate of 1.24 million units, a decrease from the downwardly revised figure of 1.33 million units recorded the month before, as reported by both the Census Bureau and the Department of Housing and Urban Development.
The expected consensus from a Bloomberg survey for this metric was 1.33 million. BMO Senior Economist Jay Hawkins noted that "the US residential market continues to struggle amid high mortgage rates and low affordability," underscoring the challenges that homebuyers are currently facing. On the treasury front, most yields observed declines, with the 10-year yield dropping by 3.6 basis points to 3.89%.
Meanwhile, the two-year rate fell three basis points to 4.07%, following significant adjustments made on Thursday reflecting the positive economic data trends. In the commodity market, West Texas Intermediate crude oil saw a significant decrease of 1.9%, landing at $76.69 per barrel, largely driven by worries regarding the stability of China’s economy and the easing of geopolitical tensions.
As the world's largest oil importer, China's economic health substantially influences global oil pricing. In company-specific news, Tapestry ($TPR) released its fiscal Q4 results, which surpassed expectations, and the outlook for 2025 earnings indicates a promising increase compared to the previous year.
Following this report, Tapestry's shares rose by 3%, making it the top performer on the S&P 500 for the day. In the precious metals market, gold experienced a notable increase of 1.6%, reaching $2,531.42 per ounce, while silver also advanced by 1.2%, settling at $28.75. The fluctuating economic landscape and its impact on various sectors and commodities reflect a complex narrative that investors must navigate as they assess the ongoing trends influenced by consumer sentiment and broader economic indicators..