U.S. Stocks Fluctuating Ahead Of Next Week's Fed Meeting

After moving mostly higher early in the session, stocks have fluctuated over the course of the trading day on Friday. The major averages have swung back and forth across the unchanged line, having difficulty sustaining any significant moves.

Currently, the major averages are all in positive territory but well off their early highs. The Nasdaq is up 66.56 points or 0.5 percent at 13,305.08, the S&P 500 is up 11.30 points or 0.3 percent at 4,305.23 and the Dow is up 30.15 points or 0.1 percent at 33,863.76.

The lackluster performance on Wall Street comes as traders continue to look ahead to the Federal Reserve’s monetary policy meeting next week.

Yesterday’s report showing initial jobless claims jumped to their highest level since October 2021 last week added to the optimism about the Fed pausing its interest rates hikes, as the central bank has warned about the impact of labor market tightness.

Key inflation reports are also likely to be in the spotlight next week, as the data could have a significant impact on the outlook for interest rates.

CME Group’s FedWatch Tool is currently indicating a 73.6 percent chance the Fed will leave rates unchanged next week but a 53.3 percent chance of another quarter point rate hike in July.

Meanwhile, the advance by the Nasdaq is partly due to a jump by shares of Telsa (TSLA), with the electronic vehicle maker surging by 5 percent to an eight-month intraday high.

Tesla is benefitting from news General Motors (GM) announced a collaboration with the company to integrate the North American Charging Standard connector design into its electric vehicles beginning in 2025.

Sector News

Reflecting the lackluster performance by the broader markets, most of the major sectors are showing only modest moves on the day.

Tobacco stocks are seeing significant weakness, however, with the NYSE Arca Tobacco Index falling by 1.5 percent.

Chemical, transportation and natural gas stocks are also showing notable moves to the downside on the day, while some strength remains visible among airline and software stocks.

Looking Ahead

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index surged by 2.0 percent, while China’s Shanghai Composite Index climbed by 0.6 percent.

Meanwhile, the major European markets moved to the downside on the day. While the U.K.’s FTSE 100 Index slid by 0.5 percent, the German DAX Index dipped by 0.3 percent and the French CAC 40 Index edged down by 0.1 percent.

In the bond market, treasuries have climbed off their worst levels of the day but continue to see modest weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.2 basis points at 3.736 percent.

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