Stocks Close Lower Following Late-Day Pullback - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction throughout much of the trading day on Friday before coming under pressure going into the close. With the late-day pullback, the major averages added to the modest losses posted in the previous session.

The major averages accelerated to the downside late in the session, closing at their worst levels of the day. The Dow slid 92.26 points or 0.5 percent to 17,663.54, the Nasdaq fell 20.53 points or 0.4 percent to 5,053.75 and the S&P 500 dropped 10.05 points or 0.5 percent to 2,079.36.

Despite closing lower for two straight days, the major averages managed to hold on to modest gains for the week. The Dow and the S&P 500 edged up by 0.1 percent and 0.2 percent, respectively, while the Nasdaq rose by 0.4 percent.

The choppy trading seen for most of the session came as traders expressed uncertainty about the near-term outlook for the markets following the strong upward move seen over the past month.

The major averages posted substantial gains for the month of October and reached their best levels in over two months earlier this week.

Traders were also digesting a mixed batch of U.S. economic data, which raised questions about the outlook for interest rates.

Before the start of trading, the Commerce Department released a report showing slightly smaller than expected upticks in both personal income and spending.

The report said personal income inched up by 0.1 percent in September after climbing by an upwardly revised 0.4 percent in August. Economists had expected income to rise by 0.2 percent.

Personal spending also crept up by 0.1 percent in September after rising by an unrevised 0.4 percent in August. Spending had also been expected to climb by 0.2 percent.

A separate report from the University of Michigan showed that consumer sentiment improvement by less than previously estimated in October.

The University of Michigan said the consumer sentiment index for October was downwardly revised to 92.1 from 90.0, although it still came in above the final September reading of 87.2.

Meanwhile, MNI Indicators also released a report showing that Chicago-area business activity unexpectedly expanded in the month of October.

MNI Indicators said its Chicago Business Barometer jumped to 56.2 in October from 48.7 in September, with a reading above 50 indicating growth. The index has been expected to edge up to 49.2.

Sector News

Gold stocks saw significant weakness on the day, with the NYSE Arca Gold Bugs Index slumping by 2.2 percent. With the drop, the index fell to its lowest closing level in almost a month.

The weakness among gold stocks came amid a decrease by the price of the precious metal, as gold for December delivery slid $5.90 to $1,141.40 an ounce.

Considerable weakness was also visible among banking stocks, as reflected by the 1.7 percent loss posted by the Dow Jones Banks Index. KeyCorp (KEY) helped lead the sector lower after announcing an agreement to acquire First Niagara (FNFG) for $4.1 billion.

Biotechnology, tobacco, and railroad stocks also saw some weakness, although selling pressure was relatively subdued.

On the other hand, natural gas stocks showed a strong move to the upside, moving higher along with the price of natural gas. With natural gas for December delivery climbing $0.64 to $2.321 per million BTUs, the NYSE Arca Natural Gas Index advanced by 1.5 percent.

Steel, housing, and semiconductor stocks also moved notably higher, partly offsetting the weakness seen in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday. Hong Kong's Hang Seng Index slid by 0.8 percent, while Australia's All Ordinaries Index fell by 0.4 percent. However, Japan's Nikkei 225 Index bucked the downtrend and advanced by 0.8 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index dropped by 0.5 percent, the German DAX Index rose by 0.5 percent and the French CAC 40 Index edged up by 0.2 percent.

In the bond market, treasuries regained some ground after falling sharply over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.2 basis points to 2.151 percent.

Looking Ahead

With the Federal Reserve suggesting a December interest rate hike remains a possibility, traders are likely to keep a close eye on the monthly jobs report due out next Friday.

Ahead of the jobs report, trading could be impacted by reports on manufacturing activity, international trade, and labor productivity and costs.

On the earnings front, Disney (DIS), Facebook (FB), Qualcomm (QCOM), Visa (V), and Tesla (TSLA) are among the slew of companies due to report their quarterly results next week.