S&P 500; US Indexes Fundamental Daily Forecast – Investors Dealing with Health Care, Banking and Energy Issues

U.S. stocks closed mixed on Friday with the S&P 500 Index and NASDAQ Composite closing higher and the Dow Jones Industrial Average settling lower. Buyers were attracted to beaten up energy shares and technology stocks extended their rally.

The benchmark S&P 500 Index rose 3.80 point, or +0.16%, to end at 2438.30 with technology stocks up 0.7% and energy shares adding 0.8%.

The blue chip Dow Jones Industrial Average fell 2.53 points, or -0.01% to close at 21,394.76 in a choppy session. The tech-based NASDAQ Composite Index advanced 28.56 points, or 0.5%, to finish at 6,265.25.

The consolidation in the crude oil market after three days of heavy selling pressure helped buoy the market. This helped boost energy stocks and the energy sector, a major component of the S&P 500 Index.

Investors also continued to focus on bank stocks after the Federal Reserve released the results of stress tests. The report from the Fed on the health of the banking sector was released on Thursday, and showed that all 34 banks assessed have “strong” levels of capital and would be able to keep lending even during a severe recession. The second sets of results, an outline of which banks may return capital to investors, are due next week.

Health care shares were down on Friday following a rally Thursday after the release of a new health-care bill draft. The new Republican plan includes cuts to Medicaid and the elimination of penalties for people who don’t buy health insurance.

Investors were selling health care stocks one day after the rally because it looks less likely that the bill will get enough votes to pass the Senate given that four Republican senators have come out in opposition of the bill in its current form.

In economic news, stocks showed little reaction to the Flash Manufacturing PMI report for June. HIS Markit said its services activity index fell to a three-month low of 53.0 from 53.6 in May, while the manufacturing report fell to 52.1, a nine-month low, from 52.7 in May.

The Commerce Department said new home sales came in at a 610,000 seasonally adjusted annual rate in May. Economists had forecast a rate of 590,000 versus 569,000 in April.

Fed speakers were also busy on Friday. St. Louis Fed President James Bullard said the Fed can afford to stop raising short-term interest rates and take a wait-and-see stance to see where the economy is headed and how policy debates in Washington play out in coming quarters.

Cleveland Fed President Loretta Mester said the Fed must continue raising interest rates to avoid inflation getting out of hand and causing a recession, according to Reuters.

Investors have a lot on their table at this time including health care reform, the Fed’s stress tests and falling crude oil prices. Therefore, the focus in the coming days will be on health care stocks, financial shares and the Energy sector.