Dow closes more than 150 points higher to erase its 2020 losses
Stocks rose on Friday to wrap up another strong week on a high note as the Dow Jones Industrial Average erased its losses of 2020.
The 30-stock Dow closed 161.60 points higher, or 0.6%, at 28,653.87. The S&P 500 gained 0.7% to close at 3,508.01. It was the index’s first-ever close above 3,500. The Nasdaq Composite advanced 0.6% to end the day at 11,695.63.
Friday’s gains put the Dow in positive territory for the year. The Dow had not sported a year-to-date gain since late February, when it traded around an all-time high. After Friday’s close, the Dow was up 0.4% for 2020.
“The industrials are the last of the major broad indexes to” erase their 2020 losses, said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “To some extent, this is psychologically positive for the market.”
He noted, though, it was “almost inevitable” that the Dow would return to positive territory. “The Nasdaq has been positive for a long time and the S&P 500 is now up more than 8% for the year.”
Walmart and Coca-Cola led the way for the Dow, rising 2.7% and 3.3%, respectively. Tech and energy were the best-performing sectors in the S&P 500, gaining 1.1% and 1.9%, respectively.
For the week, the Dow rose 2.6% for its third weekly gain in four week. The S&P 500 and Nasdaq both notched five-week winning streaks, rising over 3% each. This marks the S&P 500’s first five-week winning streak since late 2019. It’s also the longest run for the Nasdaq since a six-week win streak that ended in January.
Friday’s gains put the S&P 500 on track for its biggest August gain since 1984. The broader market index is up 7.2% month to date.
“For now, stocks seem to be enjoying the best of both worlds as they are seeing signs of improving economic momentum while monetary stimulus continues to be very accommodative – and more fiscal stimulus is likely on the way,” Yousef Abbasi, global market strategist at StoneX, said in a note.
Wall Street was coming off a mixed performance after the Federal Reserve on Thursday unveiled a major policy shift, allowing inflation and employment to run higher to continue to support the economy.
The move indicates that interest rates are likely to stay near zero for a long period of time. The central bank previously hiked rates preemptively to head off higher levels of inflation.
“The announcement of a move towards an asymmetric unemployment approach is very important and a welcome development,” Greg Daco, chief U.S. economist at Oxford Economics, said in a note. “The Fed will be in no hurry to raise rates. If and when the unemployment rate falls, the Fed will strive to ensure that the benefits from looser policy are as inclusive as possible.”
On the data front, U.S. consumer spending rose 1.9% in July, topping a Reuters forecast of a 1.5% gain, the Commerce Department said. Personal income was also stronger than expected, rising 0.4% while economists had forecast a drop of 0.2%.
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