U.S. stocks edge higher as S&P 500 attempts to snap 3-day losing streak

What’s driving markets

Several Federal Reserve officials on Thursday made it clear there’s unlikely to be a rate hike in September, though some, like Dallas Fed President Lorie Logan after the market close, suggested further increases may need to come later.

New York Fed President John Williams on Thursday sounded content with the current level of interest rates, but said he would be watching data closely to make sure the level of rates is high enough to keep inflation moving down. Chicago Fed President Austan Goolsbee suggested the Fed is almost done raising interest rates to quell inflation.

A surprise decline in weekly jobless benefit claims to mid-February levels, was reported Thursday also, a day after a surprisingly strong reading of a services sector activity gauge unsettled investors hoping for a gradual deceleration in the U.S. economy to stomp out inflation.

“In recent conversations with institutional investors, it is clear to us that investors are incrementally nervous. Foremost is their concern that economic momentum has been improving at a pace that might warrant the Fed to have to increase the path of hikes,” said Tom Lee, head of research at Fundstrat, in a note.

Stocks have appeared sensitive to moves in Treasury yields, falling as the rate on the 10-year note
BX:TMUBMUSD10Y
pushed back above 4.3% earlier this week. Equities were finding some relief Friday, with the 10-year yield down around 4 basis points near 4.22%.

But stock market weakness that began in August comes after a strong run for equities and is in line with seasonal patterns.

“It feels to me like this is a pretty predictable pattern of just churning. You’ve got this weak seasonal period, you’ve got this lack of data. I think this is probably pretty healthy, pretty predictable,” said Mark Hackett, chief of investment research at Nationwide, in an interview.

Historically, a strong run into August sets the market up for gains into the end of the year, Hackett said, a pattern he sees as likely to hold true given the continued strength of the consumer.

Helping to provide stability, Apple Inc.
AAPL,
+1.04%
stock rose 1.1% after falling more than 6% in the past two days on concerns over Chinese government restrictions to iPhone use.

“When a tech giant like Apple, with a market cap of nearly $2.8 trillion sneezes, the whole market catches a cold,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

There aren’t any major economic or corporate releases set for Friday, with the highlight being a speech from San Francisco Fed President Mary Daly at 11 a.m. Eastern. Fed Vice Chair for Supervision Michael Barr said the U.S. is a long way from making a decision on a central bank digital currencies on Friday at a payments conference. The quarterly financial accounts of the U.S. will be released at noon.

The consumer-price index for August will be released on Wednesday.

Companies in focus

• Kroger Co. 
  KR,
  +3.77%
  
  KR,
  +3.77%,
  rose 4.5% Friday, as investors weighed several developments, including the grocer’s downbeat fiscal second-quarter earnings report, a billion-dollar-plus opioid settlement and an agreement to sell more than 400 stores in an effort to complete its acquisition of Albertsons Companies Inc.
  ACI,
  +3.47%.
  Shares of Albertsons rose 2.8%.

• DocuSign Inc.
  DOCU,
  -3.38%
  stock slumped 4.7%, even as the e-signature company topped earnings expectations and hiked its guidance amid continued tight business spending.

• Smith & Wesson Brands Inc. 
  SWBI,
  +10.17%
  reported a 35% jump in quarterly sales. Shares of the firearms maker rose more than 12%.

• RH
  RH,
  -14.10%,
  the furniture retailer formerly known as Restoration Hardware, declined 11.9% after the company warned that the higher-end housing market that the company depends on would likely remain rocky.