Wall Street closes mostly in the green despite month-end vol'

Volatility was higher on Friday into month-end on Wall Street, but US stocks once again managed to defy the odds and scraped out higher closes with the majority of the benchmarks ending in the green. Mixed consumer data, trade war noise, strong spending but declining sentiment all failed to give a clear-cut direction to Wall Street. 

The Dow Jones Industrial Average, DJIA,  rose 29 points, or 0.1% to about 26,392, while the S&P 500 closed roughly 1 point higher to close at 2,926. The Nasdaq Composite Index bucked the trend and fell 11 points or 0.1% to 7,963.

As for the monthly results, the Dow lost about 1.7%, the S&P 500 shed 1.8% and the Nasdaq fell by 2.7%. Stocks remain very sensitive to trade war headlines while Chinese officials offered more hopeful rhetoric on the trade front. Stocks, however, retreated later in the session and pared back those gains in the afternoon. As for standout corporate performances, Dell Technologies Inc. rallied over 10% on better-than-expected earnings.

US data

Data from the July PCE report came in largely in line with expectations, with consumer spending growth rising slightly above consensus and our expectations at 0.6% m/m.

"Personal income rose less than expected by the market (but in line with our projection) at 0.1%, however this followed a modest upward revision for June. On net, the consumer remains resilient at the start of Q3, despite the trade noise. Turning to inflation, the PCE data matched our expectations at 0.2% m/m for both headline and core (1.4% and 1.6% y/y, respectively). Inflation remains subdued but we expect it to gradually inch up toward 2% by the end of the year,"

analysts at TD Securities (TDS) explained

The final release of University of Michigan's Sentiment indicator not only confirmed the decline to 92.1 from 98.4 in the advance release but actually unveiled a deeper fall to 89.8 in Aug — its lowest level since October 2016.

"This decline stands in contrast with the signal by the Conference Board's confidence measure, which barely dipped in August. Note that the UMich's survey is more affected by market and financial conditions (so the retreat may be reflecting the recent volatility in stocks), while the Conference. Board's tends to reflect more labor market conditions, which have remained solid,"

analysts at TDS explained. 

DJIA levels

The DJIA managed to catch a bid through the recent resistance level formed in the August correction from the 25300s. A high of 26514 was made. Should the bulls get above 26500s and hold, then the 26900s will be in focus. On the downside, the 1915 to year-to-date Fibonacci retracement measures has the 23.6% marked at 21000 - below the Dec 2018 lows of 21712. The 21-monthly moving average is located at the May and Jun lows in the 24700s as a double-bottom target. The 23.6% Fibo' of the March 2009 swing lows to all-time highs is located in the 22,200s.