Rate Hike Concerns Lead To Slightly Lower Close On Wall Street - U.S. Commentary

(RTTNews) - Stocks fluctuated over the course of the trading session on Friday before finishing the day modestly lower. The slight pullback on the day came on the heels of the slim gains posted by the major averages in the two previous sessions.

The major averages ended the day in the red but well off their lows for the session. The Dow fell 45.13 points or 0.2 percent to 18,552.57, the Nasdaq edged down less than a tenth of a percent to 5,238.38 and the S&P 500 dipped 3.15 points or 0.1 percent to 2,183.87.

For the week, the major averages all closed little changed. While the Nasdaq inched up by 0.1 percent, the Dow slipped by 0.1 percent and the S&P 500 ticked down by less than a tenth of a percent.

The lower close on Wall Street was partly due to comments from some Federal Reserve officials that raised concerns about a near-term interest rate hike.

In a speech in Anchorage, Alaska, on Thursday, San Francisco Fed President John Williams warned of the economic risks of waiting too long to resume raising interest rates.

"In the context of a strong domestic economy with good momentum, it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later," Williams said.

"The decisions we make today must take aim at where we're going, not where we are," he added. "I liken it to a car: When you're nearing the intersection, you ease off the gas so you can be ready to stop. You don't wait until you get right in front of the red light; that would force you to slam on the brakes."

Earlier this week, New York Fed President William Dudley said it is possible the central bank could raise interest rates as soon as next month.

The minutes of the Fed's last meeting in July suggested that officials were mixed about the outlook for monetary policy.

Nonetheless, traders seemed reluctant to make significant moves amid the lack of major U.S. economic data on the day.

Some key economic data is scheduled to be released next week, including reports on durable goods orders and new and existing home sales.

Fed Chair Janet Yellen is also due to speak at the central bank's annual conference in Jackson Hole, Wyoming, next Friday.

Sector News

While many of the major sectors ended the day showing only modest moves, substantial weakness was visible among gold stocks. Reflecting the weakness in the sector, the NYSE Arca Gold Bugs Index slumped by 2.2 percent.

The weakness among gold stocks came amid a decrease by the price of the precious metal, with gold for December delivery sliding $11 to $1,346.20 an ounce.

Steel stocks also showed a significant move to the downside on the day, dragging the NYSE Arca Steel Index down by 1.9 percent. Olympic Steel (ZEUS), AK Steel (AKS), and U.S. Steel (X) posted notable losses after being downgraded by KeyBanc Capital Markets.

Interest rate-sensitive utilities stocks also came under pressure amid the concerns about a near-term rate hike, with the Dow Jones Utilities Average falling by 1.2 percent.

On the other hand, some strength was visible among semiconductor stocks, with Applied Materials (AMAT) posting a standout gain after reporting better than expected third quarter earnings and providing upbeat guidance.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan's Nikkei 225 Index climbed by 0.4 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index edged down by 0.2 percent, the German DAX Index dropped by 0.6 percent and the French CAC 40 Index slid by 0.8 percent.

In the bond market, treasuries gave back some ground after closing higher in the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.2 basis points to 1.578 percent.

Looking Ahead

As mentioned above, U.S. economic data and Yellen's speech are likely to be in focus next week as traders attempt to gauge the outlook for interest rates.

On the earnings front, Best Buy (BBY), Toll Brothers (TOL), HP Inc. (HPQ), Sears (SHLD), and Big Lots (BIG) are among the companies due to report their quarterly results next week.