US Markets

S&P 500 and Dow close higher, Nasdaq posts best first half since 2009

Key Points
  • The Dow and S&P posted their best first-half gains since 2009, while the Nasdaq notched its best start to the year since 2009.
  • But the major indexes ended the first half, and the second quarter, on a sour note. The Dow, S&P and Nasdaq closed lower for the week as technology stocks have rolled over.
Dow and S&P 500 close higher, Nasdaq posts best first half since 2009

U.S. equities closed mostly higher on Friday as Wall Street capped a strong first-half performance.

The S&P 500 rose 0.1 percent, with energy and consumer discretionary leading advancers. The index has gained 8.3 percent this year, notching its best first-half gains since 2013, when it gained 12.6 percent.

The Dow Jones industrial average rose about 63 points, with Nike contributing the most gains. The 30-stock index has risen 8 percent through the first six months of the year, marking its best start to a year since 2013.

The Nasdaq composite closed just below breakeven. The tech-heavy index,however, has easily outperformed the Dow and the S&P this year, surging 14.1 percent and posted its largest first-half gains since 2009.

"We're off to a superb start and why not? The data have been good," said Mike Baele, managing director at U.S. Bank Private Client Reserve. "But what's really been positive have been earnings and the forecast for the rest of the year are pretty good."

That said, the major indexes ended the first half, and the second quarter, on a sour note. The Dow, S&P and Nasdaq closed the week as technology stocks have rolled over.

Tech has been the best-performing sector for most of 2017, rising more than 15 percent in the period. But over the past month it has dropped more than 2 percent.

Traders work on the floor of the New York Stock Exchange (NYSE) on November 22, 2016 in New York City.
Getty Images

Still, Jason Hunter, a technical analyst at JPMorgan, said in a note Thursday the recent breakdown in the stock market is not the start of a "lasting and material correction."

"While we have been growing more concerned about a summer top pattern and potential correction into the fall, that medium-term bearish reversal pattern has not developed yet," Hunter said. "Furthermore, the current weakness is in part driven by the bearish global bond price action."

Yields across the globe have been spiking higher lately amid hawkish rhetoric from key central bank officials, including European Central Bank President Mario Draghi.

The 10-year German bund yield rose to about 0.46 percent from around 0.25 percent this week. U.S. Treasury yields followed their German counterparts higher, with the benchmark 10-year yield climbing to 2.28 percent from 2.15 percent.

Higher yields have helped bank stocks this week, with the SPDR S&P Bank exchange-traded fund (KBE) advancing 3.8 percent in the period.

"Banks have a lot going for them," said Bruce Bittles, chief investment strategist at Baird. "Not only could the economy be getting better and rates are rising, but regulations seem to be going down."

The banks also received a boost after the Federal Reserve cleared capital returns programs for the big banks.

The central bank did not object to any of the buybacks or dividend hikes from the 34 banks it reviewed during the second phase of its annual stress test. This is the first time in the seven-year history of the tests implemented in the wake of the financial crisis that all banks have passed.

"This is a big deal not just for the banks but for the overall market," said Eric Ervin, CEO of Reality Shares. "Now financials are one of the biggest dividend-paying sectors."

Major U.S. Indexes

The Dow Jones industrial average rose 62.60 points, or 0.29 percent, to close at 21,349.63, with Nike leading advancers and Goldman Sachs lagging.

The gained 3.71 points, or 0.15 percent, to end at 2,423.41, with industrials leading five sectors higher and utilities underperforming.

The Nasdaq fell 3.93 points, or 0.06 percent, to close at 6,140.42.

About nine stocks advanced for every five decliners at the New York Stock Exchange, with an exchange volume of 952.13 million and a composite volume of 6.58 billion at the close.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.1.