US Stock Market Overview – Stocks End Mixed, Ahead of Long Holiday Weekend

US Stock prices were mixed on Friday with the Dow Industrials and the S&P 500 index notching up gains, and the Nasdaq closing in the red. For the month the S&P 500 large-cap index was down 1.8%. Sectors were mixed, with Materials and Industrials leading the markets higher and Cyclicals and Energy bucking the trend. Consumer spending came in stronger than expected in July which could ease fears of a potential recession. Energy shares were weighed on by declining crude oil prices, which eased ahead of the impact of Hurricane Dorian. Gold prices moved lower, weighing on gold miners, as the dollar broke out to fresh highs. The VIX volatility index rebounded on Friday, rising 5% but closed down 5% for the week.

Consumer Spending Rose

The Commerce Department reported on Friday that consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.6% last month after an unrevised 0.3% gain in June. Expectations had been for consumer spending to rise by 0.5% last month. The report added to trade and inventory data in suggesting that while the economy was slowing, the trajectory of the declines were slow. The economy is largely losing speed as the stimulus from the White House’s $1.5 trillion tax-cut packages and a government spending blitz fades. The US.-China trade conflict has weighed heavily on manufacturing and business investment, which contracted in the second quarter.

Inflation Remain Subdued

Inflation remained relatively tame and came out in line with expectations. Consumer prices as measured by the personal consumption expenditures (PCE) price index rose 0.2% in July as a drop in the cost of food was offset by a surge in energy goods and services. The PCE price index edged up 0.1% in June. On a year over year basis, the July the PCE price index increased 1.4% after gaining 1.3% in June. Excluding the volatile food and energy components, the PCE price index rose 0.2% last month, matching June’s increase. That kept the annual increase in the so-called core PCE price index at 1.6% in July. The core PCE index is the Fed’s preferred inflation measure. When adjusted for inflation, consumer spending increased by 0.4% in July.