US Stock Indexes Mixed as Investors Buy Growth, Sell Value Shares

The major U.S. stock indexes finished mixed on Friday in a choppy trade which revealed some evidence that the rotation out of growth shares and into value shares may be coming to an end.

After all three major indexes plunged early in the session, the tech-heavy NASDAQ Index mounted a strong comeback rally, while sellers continued to drive the typically less-volatile Dow Jones Industrial Average sharply lower.

The catalyst behind the two-sided price action remained fears of rising inflation which kept U.S. bond yields near a one-year high. The benchmark 10-year U.S. Treasury yield eased to 1.404% after jumping to 1.614% on Thursday, roiling stock markets.

Cash Market Performance

In the cash market on Friday, the benchmark S&P 500 Index settled at 3811.15, down 18.19 or -0.48%. The blue chip Dow Jones Industrial Average finished at 30932.37, down 469.64 or -1.52% and the tech-weighted NASDAQ Composite closed at 13192.35, up 72.92 or +0.55%.

The Internals

Volume on U.S. exchanges was 15.54 billion shares on Friday, compared with the 15.40 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.56-to-1 ratio on NASDAQ, a 1.73-to-1 ratio favored decliners.

The S&P 500 posted four new 52-week highs and one new low; the NASDAQ Composite recorded 54 new highs and 50 new lows.

The VIX, Wall Street’s fear gauge, hovered at a one-month high.

Sectors and Stocks

Financials and energy shares, the best performing S&P sectors this month, slipped 2% and 2.3% on Friday. Technology stocks rose 0.6% and semiconductor stocks advanced 2.3%.

The S&P 500 Value Index dropped 1.3% while the growth index rose 0.3% in a reversal of this month’s trend.

Shares of Apple Inc, Amazon.com Inc, Microsoft Corp and Alphabet Inc rose between 0.2% and 1.4% on Friday but had their worst week in months due to a sharp rise in U.S. Treasury yields. Tech stocks are particularly sensitive to rising yields because their value rests heavily on future earnings, which are discounted more deeply when interest rates go up.

US Economic News

On the economic front, the latest data showed U.S. consumer spending increased by the most in seven months in January but price pressures remained muted.

The personal consumption expenditures price index, which is the Federal Reserve’s preferred inflation gauge, rose 0.3% for the month, slightly ahead of the 0.2% expectation but was up just 1.5% year over year.

Personal Spending grew by 2.4%, but came in below the expected 2.6%. However, the figure was much better than the previous month’s -0.4% as consumers spent their $600 government stimulus checks.

For a look at all of today’s economic events, check out our economic calendar.