U.S. stocks ended mixed on Friday as the market awaited second-quarter earnings and fresh details of the trade war between the United States and China. The Dow Jones Industrial Average (DJIA) rose marginally to notch its 10th straight day of advances, the longest rally in almost six years. It was lifted by more than 1% gains each in Procter & Gamble (PG.N) and Chevron (CVX.N).
The Dow is a popular benchmark used by investors, traders, and financial analysts to gauge the performance of the American economy. It comprises 30 major, publicly-owned companies based in the United States. The index is calculated by adding the prices of these stocks and then dividing them by a divisor to ensure that changes in the price of any single stock don’t affect the index too much.
Despite the recent rebound in the Dow, the blue-chip index remains below its record high set during President George H. W. Bush’s tenure, when the U.S. overcame the Cold War and toppled Saddam Hussein. The Dow was also below its record high during Obama’s first term when a debt ceiling crisis exposed the extent of political gridlock in Washington and prompted Standard & Poor’s to downgrade the nation’s credit rating.
The slew of economic data expected next week will be critical for determining whether the recent rebound in the Dow and broader markets is sustainable. Investors will also be on the lookout for any indication that the Federal Reserve is poised to tighten monetary policy further, as indicated by the minutes of its most recent meeting.
For now, the Dow remains in a narrow trading range and has been unable to close above its 20-day moving average. This suggests that investors are still reluctant to buy into a new rally in the index without further evidence of corporate strength.
While the index has a few solid performers, it also has many laggards that need to turn around or continue running for the Dow to rise further. Some of the more prominent names in the index that were trading lower on Friday include Microsoft Corp (MSFT.O), Exxon Mobil Corp (XOM.N), and American Express Co (AXP.N). Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) gained 2.5%, while the VanEck Vectors Semiconductor ETF (SMH) sank 1.6%. Meanwhile, homebuilder stocks and energy-related ETFs climbed. The SPDR S&P Homebuilders ETF (XHB) jumped 1.7%, and the Global X U.S. Infrastructure Development ETF (PAVE) rose 1.2%. Among other gainers, the SPDR S&P Metals & Mining ETF (XME) rose 1.7%, and the Global X Biotechnology Innovation ETF (ARKK) rallied 2.5%. ARKK is one of the most speculative-story stocks in the Dow, with a weighting of just 1.6%. Other notable gainers included the iShares Emerging Technology ETF (EWI) and the ARK Genomic Revolution ETF (ARKG). All three ETFs have more than doubled their year-to-date returns.
