The stock market eked out gains in the last hour of trading to close higher Friday, as strong earnings reports from the retail sector outweighed a drop in home sales and news on the economy. The Dow Jones Industrial Average led major indexes, closing up 0.6%.
The Nasdaq composite closed just 0.01% higher and the S&P 500 gained 0.5%. The small-cap Russell 2000 pink index 0.6%.
Pink volume on the Nasdaq and the NYSE vs. the same time on Thursday, early data showed.
On the week, the Dow was the only one of the major indexes to post a gain on the week, up 0.01%.
The yield on the benchmark 10-year Treasury note rose 12 basis points to 3.82%.
Crude oil prices dropped 1.8% to $80.21 per barrel as US oil futures flashed a possible oversupply for the first time this year.
The S&P Utilities Sector ETF (XLU) was the best-performing of all 11 S&P sectors, gaining 2.1%. The S&P Energy Select Sector ETF (XLE) was the worst, sliding 0.8% Friday.
Farm Equipment, Building Supply Stocks Pass Buy Points
In other economic data, existing home sales fell 5.9% in October and showed continued weakness in housing demand over the past nine months. All US regions showed declines.
“The stark rise in mortgage rates as of late has brought housing demand to an abrupt halt, with some areas experiencing the worst sales numbers in over a decade,” said Peter Essele, head of portfolio management for Commonwealth Financial Network.
Meanwhile, Boston Federal Reserve President Susan Collins says she expects the central bank to raise rates in December. “All of the possible increments should be on the table as we decide what is sufficiently tight,” Collins said in an interview on CNBC.
The probability the Fed will raise rates by 0.5% in December dropped slightly to 75.8%, while odds for a 75-basis-point hike are up to 24.2%, according to the CME FedWatch tool.
Irrigation systems maker Lindsay (LNN) broke out from a cup base to new highs on Friday. Lindsay shares the top rating in the IBD farm machinery group with John Deere (DE), which reports earnings next week. Deere stock has been holding gains well after topping the 400 level and a 406.12 buy point.
Building products maker Griffin (GFF) also hit new highs and is extended past its buy point of 33.63.
Retail Earnings Lift Stocks As Holiday Season Approaches
Applied Materials (AMAT), Ross Stores (ROST), Palo Alto Networks (PANW) and gap (GPS) all beat views late Thursday and early Friday.
AMAT’s sales of $6.75 billion and earnings of $2.03 per share came above estimates of $6.45 billion and $1.73. The chip equipment maker lowered its Q4 outlook by $400 million due to China’s Covid lockdown. Shares trimmed most gains and closed up 0.2%, testing the 200-day line.
Palo Alto Networks posted $1.6 billion in revenue and earnings of 83 cents per share, topping estimates of $1.55 billion and 69 cents. PANW stock gapped up 7% Friday, lifting above its 50-day line.
The S&P Retail Sector ETF (XRT) jumped 1% Friday.
Ross booked $4.6 billion in sales with earnings of $1 per share. ROST stock soared nearly 10% and was the best stock market performance since Nov. 9, 2020, when it rose 15.6%, according to Dow Jones Market Data.
Gap reported sales of $4.04 billion and earnings of 77 cents per share. GPS stock rose 7.5%, to the highest price since April.
Chinese Firm Bucks China Lockdowns
Chinese e-commerce giant JD.com (JD) beat views and bucked pressure from China’s lockdowns, earning 38 cents per share on sales of $34.2 billion. Shares fell 2.5% as they test resistance at the 200-day line.
Foot Locker (FL) beat top and bottom-line estimates and raised its outlook. The stock rallied, closing 8.7% higher. It is forming a cup base with a 40.10 buy point.
lululemon (LULU) dipped 1.8% Friday in stock market trading but still is near a buy point. This Big Cap 20 stock is counting on consumers to step up to the table this season and take a bite out of its bloated inventory. It reports fiscal third-quarter earnings on Dec. 8.
The Innovator IBD 50 ETF (FFTY) fell 0.5%, weighed down by oil stocks such as Diamondback Energy (FANG), Conoco Phillips (COP) and Earthstone Energy (ESTE).
Follow Michael Molinski on Twitter @IMmolinski
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