Stocks Pare Gains in Quieter Session Ahead of Long Weekend

Stocks pare gains by late Friday in a quieter, low-volume session ahead of the long Independence Day weekend.
By Keris Alison Lahiff ,

Stocks pared gains by late Friday in a quieter, low-volume session ahead of the long Independence Day weekend.

The S&P 500 had traded just 322 million shares by late afternoon Friday, a fraction of the three-month daily average of 641 million shares.

The S&P 500 was up 0.04%, the Dow Jones Industrial Average was flat, and the Nasdaq added 0.2%.

Crude oil added to gains in the afternoon session despite the number of active oil rigs in the U.S. rising over the past week. Active oil-drilling rigs climbed by 11 to 341, according to Baker Hughes data. Prices have been boosted recently by fairly consistent declines in U.S. inventories and production. 

West Texas Intermediate crude oil closed 1.4% higher at $48.99 a barrel on Friday afternoon. 

It's been a wild week for stocks. Wall Street began the week in sharp decline after the shock of Friday's pro-Brexit vote, before snapping into recovery mode. Stocks recovered from the Brexit selloff on hopes of increased monetary stimulus from the world's central banks. Bank of England Governor Mark Carney fueled those hopes on Thursday when he noted that the central bank would likely need to implement further easing.

Stocks ended the month and second quarter on a confident note on Thursday, ending the session at the day's highs. For the entire three months from April to June, the S&P 500 posted gains of nearly 2%. A major quarterly rally in crude oil prices helped to boost equities. The commodity ended the quarter with gains of 26%, its best quarterly performance since 2009, thanks to disruptions to global oil production, particularly in Canada, Nigeria and Venezuela.

Manufacturing activity in the U.S. continued to recover in June from a rough start to the year as the headwinds of a stronger U.S. dollar and weaker global demand began to ease. The ISM Manufacturing Index rose to 53.2 in June from 51.3. Analysts expected a reading of 51.5.

"The overall tone of this report was encouraging, suggesting that the recent upswing in U.S. manufacturing sector activity is being sustained, which will be interpreted at the [Federal Reserve] as further signs that the U.S. economy is continuing to dig itself out of the recent slump," said Millan L. B. Mulraine, deputy chief U.S. macro strategist at TD Securities. "Moreover, the steady gains in the various forward-looking indicators suggest that this positive momentum is likely to be sustained in the coming months."

A separate read on the manufacturing activity showed June levels at their best in three months. The Markit's U.S. PMI Manufacturing Index increased to 51.3 in June from 50.7.

Construction spending fell in May, according to the Census Bureau. The measure declined 0.8%, a surprising reading that conflicted with estimates of a 0.6% increase. Residential spending was flat from April's reading, while nonresidential spending declined 1.3%.

Car sales mainly came in strong last month. For June, Ford (F) - Get Report vehicle sales rose 6.4% thanks to strength in its truck segment, and Fiat Chrysler (FCAU) - Get Report reported a 6.5% increase in its auto sales over June on strong demand for its Jeep brand. General Motors (GM) - Get Report was the weak one of the bunch, reporting a 1.6% decline in U.S. sales in June. The drop was steeper than an expected 1.3% decline.

Tesla Motors (TSLA) - Get Report confirmed that regulators had begun a preliminary investigation into the fatal crash of a Model S vehicle in "autopilot" mode in Florida early May. The feature automatically changes lanes and independently reacts to changes in traffic conditions.

Honeywell (HON) - Get Report confirmed plans to purchase distribution systems company Intelligrated for $1.5 billion. Intelligrated is currently owned by a company backed by Permira funds. Honeywell expects the acquisition to add roughly $900 million to 2016 sales.

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