Most U.S. stocks advanced on Friday, heading toward the close of a robust week, though a pullback in technology shares kept major indexes mixed. The S&P 500 edged up 0.2%, while the Dow Jones Industrial Average gained 0.4%. The Nasdaq composite fell 0.3%, dragged down by losses in big tech names.
Tech drag offsets broad gains
Investors rotated out of high-flying technology stocks into sectors that benefit from economic growth, such as industrials and financials. Apple, Microsoft, and Amazon all declined, while banks and energy companies posted gains. According to market analysts, the rotation reflects confidence in the economic recovery and expectations that interest rates may rise.
The mixed finish comes after a week of mostly positive moves. The S&P 500 is on track for its third straight weekly gain, supported by strong corporate earnings and optimism about the economy.
Economic data supports rally
Data released Friday showed that U.S. manufacturing activity expanded at a solid pace in June, with the Institute for Supply Management's index coming in at 53.5, above the 50 threshold indicating growth. However, the reading was slightly below May's figure, suggesting some moderation.
“The economy is still moving forward, but the pace of recovery is stabilizing,” said a senior economist at a major bank. “That’s actually a healthy sign for sustained growth.”
Bond yields rise
Treasury yields climbed, with the 10-year note reaching 1.48%, up from 1.45% a day earlier. Higher yields tend to pressure growth-oriented tech stocks while benefiting value-oriented sectors. The yield curve steepened, a pattern often associated with expectations of stronger economic activity.
Global markets mostly higher
European and Asian markets also posted gains. Germany's DAX rose 0.8%, France's CAC 40 added 0.6%, and the UK's FTSE 100 climbed 0.5%. In Asia, Japan's Nikkei 225 advanced 0.7%, and Hong Kong's Hang Seng gained 0.4%.
Investors continued to monitor developments in the U.S. debt ceiling debate, though the immediate impact on markets remained limited.
Outlook
As the second half of the year begins, market participants are focused on corporate earnings reports due in the coming weeks. Analysts expect S&P 500 earnings to grow roughly 10% year-over-year in the second quarter, driven by profit margins and revenue growth.
“The key question is whether tech can regain its leadership or if the rotation into cyclicals will persist,” a portfolio manager said. “Either way, the overall trend remains positive.”
