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Stocks close higher but end week in the red

CNBC logo CNBC 8/11/2017 Thomas Franck

Stocks closed higher Friday as weak inflation data encouraged traders that the Federal Reserve will keep monetary policy lower for longer. Gains were muted as tensions between the U.S. and North Korea persisted.

The Dow closed 14 points higher after briefly dipping into negatively territory, with Apple contributing the most gains.

The S&P 500 gained 0.13 percent, with information technology rising 0.6 percent to lead advancers. The index also posted its second-worst weekly performance of the year. It fell 1.43 percent for the week, the most since the week of March 24.

The Nasdaq outperformed, rising 0.64 percent as large-cap tech stocks rebounded.

The Labor Department said Friday that the Consumer Price Index edged up 0.1 percent last month, versus expectations of a 0.2 percent gain. The index is a widely followed inflation metric.

"With weak inflation, if not turning down, it will make it even more difficult for the Fed to do anything, between today's CPI and yesterday's PPI," said Baird Chief Investment Strategist Bruce Bittles. "Are you going to raise rates in this environment?"

Investors looked at inflation data for clues on the Fed's next monetary policy move. Market expectations for a December rate hike fell after the CPI data was released. Just 38 percent of investors expected the central bank to rates again at the end of the year, down from about 45 percent, according to the CME Group's FedWatch tool.

Stocks are coming off their worst session since May as tensions between the U.S. and North Korea linger.

In the latest developments between the two countries' war of words, President Donald Trump on Friday tweeted another stark warning to North Korea.

Military solutions are now fully in place,locked and loaded,should North Korea act unwisely. Hopefully Kim Jong Un will find another path!

The tweet came a day after Trump said his previous warning to North Korea that it would face "fire and fury" may not have been "tough enough."

"This is a very fluid environment. Typically you would see buyers coming in off a sell-off … you could see some buying on the dips," said Prudential Financial chief market strategist Quincy Krosby.

"We could see some zigging and zagging going into the weekend."

The CBOE volatility index hit its highest level since the presidential election before easing to 14.89.

Before this week, U.S. stocks have been hitting record highs, boosted by mostly stronger-than-expected earnings. Snap, however, did not beat expectations. The social media company posted a larger-than-expected loss and smaller-than-expected revenue, sending the stock down more than 10 percent.


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