Stocks rose higher on Friday as investors looked past a rough September as positive COVID treatment news boosted economic recovery names. However, even with the day's rally, the S&P 500 fell 2.2% for the week, while the Dow Jones Industrial Average and Nasdaq fell 1.4% and 3.2%, respectively.
On Friday, Merck (NYSE: MRK) released new data that showed its potential COVID antiviral pill reduced the risk of hospitalization or death due to mild to moderate infection by about 50%. Shares of the Dow component rose over 8% by the end of the session.
Here's how the market settled to close out the week:
S&P 500 Index (NYSE: SPY): +1.15% or +49.55 points to 4,357.09
Dow Jones Industrial Average (NYSE: DIA): +1.43% or +483.20 points to 34,327.12
Nasdaq Composite Index (NASDAQ: QQQ): +0.82% or +118.12 points to 14,566.70
Manufacturing activity expanded at greater-than-expected rate in September:
U.S. manufacturing sector showed a greater-than-expected expansion of activity in September, despite materials shortages.
The Institute for Supply Management's (ISM) manufacturing index rose to 61.1 in September from 59.9 in August, according to the firm's monthly report published Friday, marking the highest level since May. Readings above the neutral level of 50.0 indicate an expanding sector.
"Business Survey Committee panelists reported that their companies and suppliers continue to deal with an unprecedented number of hurdles to meet increasing demand," said Timothy Fiore, chair of the ISM, said in a press release. "All segments of the manufacturing economy are impacted by record-long raw materials lead times, continued shortages of critical materials, rising commodities prices and difficulties in transporting products. Global pandemic-related issues--worker absenteeism, short-term shutdowns due to parts shortages, difficulties in filling open positions and overseas supply chain problems--continue to limit manufacturing growth potential."
Consumer sentiment ticks higher for September's final print:
Consumer sentiment was revised higher for September's finial print, but still held near a decade low as consumers remained concerned over the Delta variant and rising inflation.
The University of Michigan's consumer sentiment index came in at 72.8 in the final monthly reading for September, rising from August's 70.3 and the 71.0 previously posted for the month.
"Consumers do not view economic conditions as conducive to establishing an inflationary psychology, a self-fulfilling prophecy," said Richard Curtin, chief economist for the Surveys of Consumers, in a press statement. "Instead, consumer have favroed postponement due to what they still consider a transient spike in prices."
"While this reaction may well fade in the months ahead, the shift toward postponement of purchases has been so significant that it could not be quickly reversed," he added. "Even if transient, higher inflation has already decreased living standards, and further damage is anticipated as just 18% of all households anticipated income gains would be larger than the expected inflation rate."
PCE inflation rose at faster-than-expected monthly and annual rates last month:
Personal consumption expenditures (PCE) rose at faster-than-expected monthly and annual rates in August, underscoring persistent increased in underlying inflation for the Federal Reserve's key gauge.
Headline PCE rose by 0.4% in August compared to July, and by 4.3% compared to last year, according to the Bureau of Economic Analysis' monthly report. The yearly increase was the biggest since 1991.
Core PCE, which excludes volatile food and energy prices, rose by 0.3% in August over July, matching July's rate. This sub-index has risen on a month-over-month basis since December 2020. Compared to last year, core PCE increased by 3.6%, marking the fastest year-over-year rise in three decades.
Personal income, spending rates increased in August:
U.S. personal income and spending each increased in August, as government social benefits and wage growth continued to support consumers' purchasing power.
Personal income increased by 0.2% in August after rising by 1.1% in July, according to the Bureau of Economic Analysis' monthly data published Friday, coming in-line with consensus expectations.
Personal spending rose by 0.8% in August, which was above the 0.7% anticipated. July's spending rate was downwardly revised to 0.1%, down from the 0.3% increase reported prior.
Here's how benchmarks started trading soon after opening bell:
S&P 500 Index: +0.47% or +20.34 points to 4,327.88
Dow Jones Industrial Average: +0.63% or +213.19 points to 34,057.11
Nasdaq Composite Index: +0.37% or +51.07 points to 14,504.49