Crude Rebound Underpins S&P 500 Index; NASDAQ Boosted by Health Care Stocks

U.S. stock equities continued to churn on Friday with the major indexes once again posting mixed closes. This may be further evidence of the stock rotation that has been evident for about two weeks. Overall, U.S. stocks closed little changed for the week, with the Dow and S&P posting marginal gains in the period.

In the cash market, the benchmark S&P 500 Index settled at 2438.50, up 3.80 or +0.16%. The blue chip Dow Jones Industrial Average finished at 21394.76, down 2.53 or -0.01%. The technology-based NASDAQ-100 Index closed at 6265.71, up 29.02 or +0.47%.

A rebound in crude oil stocks helped the energy sector recover on Friday, snapping a four-day losing streak. Energy stocks were under pressure all week as crude prices fell on oversupply concerns. This helped underpin the S&P 500 Index.

The Dow Jones Industrial Average was boosted by strength in Boeing, but gains were limited by weakness in Home Depot.

Health care stocks underpinned the NASDAQ Composite Index. Investors continued to respond positively to the unveiling of the new U.S. health care plan presented by the Senate on Thursday.

Investors also continued to monitor the financial sector on Friday in the wake of the Federal Reserve stress tests on 34 institutions. The testing results showed the financial institutions have enough capital to make it through various scenarios tied to financial crises. Financial stocks were under pressure most of the week due to the flattening of the yield curve.

U.S. Economic Reports

In U.S. economic news, new home sales rose 2.9 percent in May, below the expected increase of 3.7 percent. The data showed new home sales came in at 610K units, higher than the 599K estimate and the upwardly revised 593K units from last month.

Flash Manufacturing PMI disappointed, coming in at 52.1, below the 53.1 forecast and 52.7 previous read. Flash Services PMI was also below expectations at 53.0. Traders were looking for 53.9.

In other news, St. Louis Fed President James Bullard said Friday there is still no need to further rise short-term rates right now. Bullard said the Federal Reserve can afford to stop raising short-term interest rates and wait and see how economic developments and policy debates play out in coming quarters.

Bullard said he saw no reason to raise interest rates as the economy appears to be firmly stuck in a “low growth, low inflation and low-interest-rate regime.”

“Many future developments could impact the Fed’s policy path, but the Fed does not need to pre-empt any of them,” Bullard said in a speech to a bankers convention in Nashville.