US stocks waver, remain on track to end week with losses

Traders work on the floor at the New York Stock Exchange in New York, Friday, July 1, 2022. (AP Photo/Seth Wenig, File)

Stocks were mostly higher on Wall Street Friday afternoon, though major indexes remained on pace to finish lower for the week after several days of bumpy trading.

The S&P 500 edged up 0.1% as of 2:18 p.m. Eastern. The benchmark index had traded as high as 0.8% earlier in the day. The Dow Jones Industrial Average rose 84 points, or 0.3%, to 33,630 and the Nasdaq fell 0.4%.

Health care, financial and utilities stocks were among the biggest gainers in the S&P 500. UnitedHealth Group rose 2.6%, Charles Schwab gained 2.3% and Sempra Energy added 2.2%.

A slide in energy and technology companies kept the market's gains in check. Exxon Mobil fell 1.6% amid a broad pullback in energy futures. U.S. crude oil fell 2.9%.

Homebuilders and other real estate companies fell following a report showing that sales of previously occupied U.S. homes fell in October for the ninth month in a row, the latest sign that the housing market is slowing as homebuyers grapple with sharply higher mortgage rates, rising home prices and fewer properties on the market. Zillow Group fell 5.1% and homebuilder Hovnanian Enterprises slid 2.9%.

Several big retailers made solid gains after reporting strong quarterly results and gave investors encouraging financial forecasts. Discount retailer Ross Stores surged 10.2% and clothing retailer Gap rose 5.6% after beating analysts’ expectations. Foot Locker climbed 8.5% after raising its profit and revenue forecast for the year.

The solid earnings from retailers cap off a shaky week for Wall Street as investors try to get a better sense of inflation's path and its impact on consumers and businesses. Investors have been particularly anxious about the Federal Reserve's fight against inflation and have been looking for signs that might allow the central bank to shift to less aggressive interest rate increases. That anxiety was heightened on Thursday after a Fed official suggested U.S. interest rates might have to be raised higher than expected to cool inflation.

“It's all been the same story for a year,” said Keith Buchanan, portfolio manager at Globalt Investments. “It's about what inflation is doing, how the Fed responds, and from there how does the consumer respond.”

The central bank has already warned that the main lending rate may have to rise to a more painful level than anybody had anticipated, possibly between 5% and 7%. The Fed’s benchmark rate currently stands at 3.75% to 4%, up from close to zero in March.

The Fed is trying to tame the hottest inflation in decades by making borrowing more difficult and curtailing spending. Several big measures of inflation have shown that prices are easing a bit, but other economic indicators show that consumers remain resilient, as does the jobs market.

The Fed's strategy risks sending the economy into a recession if it hits the brakes too hard on economic growth. The latest mix of inflation and economic data has Wall Street trying to gauge whether the Fed needs to keep pushing along with interest rate increases and whether it can achieve its goal without severely crimping consumer spending or employment.

The U.S. reported this week that retail sales rose 1.3% in October as Americans increase their spending at stores, restaurants, and auto dealers, a sign of consumer resilience as the holiday shopping season begins. That's not to say consumer behavior hasn't been affected by inflation. Major retailers say Americans are holding out for sales, refusing to pay full price, with the cost of gasoline, rent, food and almost everything else much higher than it was last year.

European markets were higher and Asian markets closed mixed overnight.

Bond yields rose. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.82% from 3.77%.

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Joe McDonald and Matt Ott contributed to this report.