- By Panos Mourdoukoutas
Major equity indexes ended the week mixed following choppy trading in the previous days. The S&P 500 closed at 4,155.86, down 0.08% for the day, while the Dow Jones closed at 34,226.7, up 0.40%. The Nasdaq composite was trading at 13,470.99, down 0.48% for the day.
Earlier in the day, major equity indexes had opened higher Friday, with trading buoyed by robust economic data in the U.S. manufacturing and service sectors, suggesting that the economic recovery is gaining momentum. Economically sensitive sectors like energy and banking led the way.
But things turned mixed by the middle of the trading day as the Nasdaq dipped into red following another cryptocurrency sell-off.
Friday's close ends another volatile week on Wall Street. Major equity averages began the new week under pressure from inflationary concerns raised by the hot consumer and producer price data published in the previous week in the U.S. and China. In addition, hot consumer price data from the UK published earlier in the week and a crush in cryptocurrencies added to the negative investor sentiment, with major averages selling more than 2.5% in early Wednesday trade.
But by late Wednesday afternoon, things took another turnaround with all equity averages rallying led by Nasdaq. The catalyst behind the change in Wall Street sentiment was the release in the FOMC April minutes. It told traders and investors what they wanted to hear: the U.S. economy continues to recover from the Covid-19 recession, but it was still far away from its two goals: price stability and full employment. Thus, the FOMC reiterated its intention to continue its low-interest-rate policy, instructing its execution arm, the "Desk," to continue buying U.S. Treasuries and Mortgage-Backed Securities.
The Fed's low-interest-rate policy is bullish for equities, as it "turns the risk on." As a result, it makes risky assets like equities more appealing than money market funds and U.S. Treasuries.
The rally in major indexes gained momentum on Thursday and Friday morning as solid data on the U.S. economy out from the Labor Department, the Conference Board and IHS Markit added to the positive investor sentiment on the direction of the U.S. economy. It could have been carried to the closing if it wasn't for another sell-off in cryptocurrencies that spoiled investor appetite for technology shares.