After three weeks of gains, stocks closed the week lower across the board. Government bond yields also fell for the third week in a row. Growing concerns about rising inflation and the potential to maintain the pace of economic expansion paused investors. However, the significantly improved June retail sales compared to projections helped offset declining consumer sentiment towards higher prices in many categories.
The Dow Jones Industrial Average was down 0.9 percent on Friday, the S&P 500 Index was down 0.8 percent, and the Nasdaq Composite was also down 0.8 percent. The MSCI World Index also lost 0.6 percent over the course of the day. The Russell 2000 small-cap index fell 1.2 percent on Friday.
All major indices posted losses for the week, with the Dow 0.9 percent, the S&P 500 1.0 percent and the Nasdaq 1.9 percent. The Russell 2000 Index lost 5.41 percent over the course of the week.
The notable market winner on Friday was Moderna (MRNA), one of the COVID-19 vaccine manufacturers. Moderna shares shot up 10.3 percent after the announcement that it would take over Alexion Pharmaceuticals (ALXN) in the S&P 500 Index on Wednesday.
Retail sales in June were better than expected on Friday. Instead of the forecast decline of 0.3 percent compared to the previous month, pre-sale sales rose by 0.6 percent in June. Consumer auto sales also beat monthly expectations, up 1.3 percent, beating expectations of a 0.4 percent increase.
The preliminary July Consumer Sentiment Index from the University of Michigan fell to 80.8, its lowest level in five months. It also fell short of last month’s 85.5 level. It was reported that one-year inflation expectations have been revised upwards from 4.2 percent in June to 4.8 percent. Updated forecasts for the five- to ten-year inflation rate rose to 2.9 percent in June from 2.8 percent.
On Friday, the WTI crude oil price rose $ 0.16 to $ 71.81 a barrel. The spot gold price fell $ 17.50 to $ 1,811.40 an ounce. The US dollar index rose 0.1 percent on Friday to 92.72.
The yield on 10-year government bonds fell to 1.3 percent at the end of the week.
Federal Reserve Chairman Jerome Powell made public statements this week expressing the Fed’s view that the rise in consumer prices is likely to be temporary, while recognizing that price increases will at least partially offset the decline in general Have driven consumer sentiment.
Earnings reporting for the second quarter will pick up pace this week with reports from Netflix (NFLX), Johnson & Johnson (JNJ), and American Express (AXP). In addition, the latest figures on the levels of activity in housing and housing construction as well as preliminary figures on the levels of manufacturing and services are published for July.