What’s happening: US stocks closed higher on Friday, with the major indices hitting new highs following encouraging economic releases.
What happened: The S&P 500 index delivered its biggest rally since the week ending December 27, 2019, when the gauge climbed for five consecutive weeks. Meanwhile, the tech-laden Nasdaq 100 climbed to its 35th record high this year.
While sending the indices north, trading volumes remained relatively low, as investors continued to fret over the stalemate in Congress around the new covid-19 stimulus.
Why it matters: Investor sentiment has been high with various positive economic reports over the last few weeks suggesting a faster recovery for the US economy.
The IHS PMIs for August surprised investors with the flash reading for the manufacturing sector hitting a 19-month high of 53.6 in August, up from 50.9 in July. The service PMI also jumped to a 17-month high of 54.8.
Sales of existing homes surged for the second successive month, rising 24.7% in July to an annual rate of 5.86 million, according to the National Association of Realtors.
There was also some positive news on the covid-19 front, with the US recording a decline in daily infections last week. Vaccine development news also cheered investors, with Johnson & Johnson initiating the final phases of its trials for its coronavirus vaccine candidate, while Pfizer and BioNTech saying they expect to submit their candidate by October.
Investors remained concerned, however, regarding the US government’s new covid-19 rescue plan. US-China tensions also dampened markets, with no plans of a meeting between the two countries.
Apple’s shares spiked to a new record high on Friday, while Tesla’s stock closed above the $2,000 mark for the first time, extending its rally of 390% year to date.
Deere & Co’s shares climbed more than 4% toward a new 52-week high on Friday, after the company reported stronger-than-expected results for its fiscal third quarter.
The S&P 500 added 0.3% to settle at 3,397.16 on Friday, marking its second record close for the week. The Nasdaq 100 jumped to a new high of 11,311.80, up 0.4%, after notching a record high of 11,323.71 earlier in the session. The Dow Jones index gained 190.60 points to end at 27,930.33 on Friday, closing flat for the week.
What to watch: Investors await data on the Chicago Fed national activity index from the US. The Chicago Fed national activity index jumped to a record high of 4.11 in June, versus a revised reading of 3.5 in May. Markets will continue to look out for any signs of progress around the new stimulus bill.
Despite the slowdown, covid-19 numbers remain a concern for the markets, with total cases exceeding 5.7 million in the US.