On Friday afternoon, U.S. equity indexes experienced a downturn, surrendering earlier gains as government bond yields surged, reflecting the cautious sentiment among investors regarding the Federal Reserve's preferred inflation metrics. The S&P 500 index saw a decrease of 0.2%, concluding the day at 5,583.2.
Meanwhile, the Nasdaq Composite's marginal dip was under 0.1%, settling at 17,499.2, and the Dow Jones Industrial Average witnessed a more significant drop of 0.5%, closing at 41,150.6. Notably, all three indexes had initially shown positive movement earlier in the trading session. Importantly, the S&P 500 and the Dow are on track to mark their fourth consecutive month of gains. Throughout the day, all sectors, apart from consumer discretionary, experienced declines, with energy emerging as the leading laggard.
The bond market mirrored these trends, as most Treasury yields escalated; the 10-year yield increased by four basis points to reach 3.91%, while the two-year yield saw a rise of 2.8 basis points, also ending at 3.91%. In economic updates, the personal consumption expenditures (PCE) price index recorded an expected increase of 0.2% for July, following a modest gain of 0.1% in June.
The year-over-year rate remained consistent, showing no change from the previous month's increase of 2.5%. Additionally, the core PCE price index also climbed by 0.2% for the second consecutive month, aligning with market forecasts, while the year-over-year rate stabilized at 2.6%, maintaining this level for three months in a row. Turning to manufacturing trends, the Institute for Supply Management's Chicago Purchasing Managers’ Index (PMI) rose to 46.1 in August, compared to 45.3 in July.
This figure surpassed the anticipated print of 44.8, as per a Bloomberg-conducted survey; however, it still indicates contraction in the manufacturing sector, a sentiment echoed across regional data and the S&P Global flash estimate. Additionally, the consumer sentiment index from the University of Michigan underwent a slight upward revision to a score of 67.9 for August, up from an initial estimate of 67.8.
This result, however, fell short of the expected figure of 68.1 from Bloomberg's survey. In corporate news, semiconductor giant Intel ($INTC) is reportedly collaborating with financial institutions Morgan Stanley ($MS) and Goldman Sachs Group ($GS) to strategize a viable path forward amidst the technology company's current challenges.
Following these developments, Intel's share price surged by 7.7%, positioning it among the significant gainers on the S&P 500, Nasdaq, and Dow indexes. Meanwhile, MongoDB ($MDB) reported a more stabilized operational performance in its fiscal Q2 results after navigating a tumultuous start to 2024. Truist Securities characterized this as an operational rebound, with shares skyrocketing by 16% intraday, making it the top performer within the Nasdaq. In commodities, West Texas Intermediate crude oil prices fell by 2.5%, settling at $73.98 per barrel.
This decline comes in the lead-up to the Labor Day holiday weekend, where market attentiveness has shifted toward soft demand conditions, even as Libya continues to affect supply dynamics. Analysts at PVM Oil Associates noted, "To trust Libyan influence, bullish or bearish, has never played out well in recent history.
The market will find a workaround and is used to the on/off switch being thrown by the factions within the North African state." Gold prices dropped by 1% to $2,535.22 an ounce, while silver saw a 2.2% decrease to $29.32. Overall, market fluctuations on Friday reflected a complex interplay between investor sentiment, inflation concerns, and global economic signals, with players across various sectors adjusting their strategies in response to evolving conditions..