U.S. stocks closed mostly flat on Friday, as investors weighed geopolitical comments and insights from the Federal Reserve by President Donald Trump, while also absorbing quarterly earnings reports from significant companies, signaling the onset of the earnings season. The three major stock indexes all finished in the red.
The Dow Jones Industrial Average (DJI) fell 0.2%, or 83.11 points, closing at 49,359.33. Similarly, the S&P 500 decreased by 0.06%, or 4.46 points, concluding at 6,940.01, with the communication services and healthcare sectors suffering the most. The Communication Services Select Sector SPDR (XLC) dropped by 0.7%, and the Health Care Select Sector SPDR (XLV) fell by 0.8%. In addition, the Materials Select Sector SPDR (XLB) saw a decline of 0.4%, while the Utilities Select Sector SPDR (XLU) fell by 0.5%. Despite this, six of the 11 sectors in the benchmark index ended positively.
The Nasdaq also slipped, losing 0.06%, or 14.63 points, to settle at 23,515.39. The CBOE Volatility Index (VIX), which measures market volatility, edged up by 0.13% to 15.86. On the New York Stock Exchange (NYSE), declining stocks outnumbered advancing ones by a ratio of 1.19-to-1, while on the Nasdaq, decliners outnumbered advancers at a ratio of 1.34-to-1. Total shares traded reached 18.77 billion, exceeding the recent 20-session average of 16.85 billion. Notably, on the Nasdaq, there were 2,334 new 52-week highs and 2,719 new lows, while the NYSE reported 423 new highs and 64 new lows.
Friday’s decline followed a previous winning session and came as investors evaluated Trump’s recent comments. The President expressed a preference for National Economic Council Director Kevin Hassett to remain in his current position rather than be named the new Federal Reserve Chairman, despite market speculation around Hassett’s potential candidacy as more favorable for maintaining low interest rates. Former Fed Governor Kevin Warsh has recently gained traction in the race for the chairmanship.
In contrast, semiconductor stocks experienced gains for the second consecutive day. Taiwan Semiconductor Manufacturing Company Limited (TSM), which posted impressive fourth-quarter earnings, rose by 0.2%. This increase followed a trade agreement between Taiwan and Washington, wherein Taiwanese tech and semiconductor firms are set to invest $250 billion in U.S. production capacity. Other chip manufacturers also performed well, with Broadcom Inc. (AVGO) rising by 2.5%, and Micron Technology, Inc. (MU) gaining 7.8%, highlighting the momentum in the chip sector.
Conversely, financial stocks faced headwinds throughout the week, despite a few major banks announcing strong earnings. Bank equities came under scrutiny after Trump suggested implementing a 10% cap on credit card interest rates for one year, a move that could potentially affect the profitability of financial firms. Shares of The Goldman Sachs Group, Inc. (GS) fell by 1.4%, while Wells Fargo & Company (WFC) saw a decrease of 0.7%.
The earnings season is ramping up, with several major technology companies expected to deliver quarterly results in the upcoming week. Economic data released on Friday indicated that industrial production rose by 0.4% in December, surpassing estimates that predicted a rise of 0.2%. Additionally, capacity utilization improved to 76.3% in December, compared to 76.0% in the preceding month.
In terms of weekly performance, the Dow lost 0.3%, while the S&P 500 and Nasdaq declined by 0.4% and 0.7%, respectively.
