Stocks Climb Well Off Worst Levels But Still Close In The Red - U.S. Commentary

(RTTNews) - After moving sharply lower earlier in the session, stocks regained some ground going into the close of trading on Friday but remained mostly in the red. With the drop on the day, the markets extended the sell-off seen in the previous session.

The major averages ended the day in negative territory but well off their lows for the session. The Dow dipped 57.12 points or 0.3 percent to 17,773.64, the Nasdaq slid 29.93 points or 0.6 percent to 4,775.36 and the S&P 500 fell 10.51 points or 0.5 percent to 2,065.30.

For the week, the major averages moved notably lower due largely to the steep drop on Thursday. The Nasdaq plunged by 2.7 percent, while the Dow and the S&P 500 both slumped by 1.3 percent.

The weakness on Wall Street came on the heels of the release of a batch of disappointing U.S. economic data as well as a negative reaction to some of the latest earnings news.

Before the start of trading, the Commerce Department released a report showing a slightly smaller than expected increase in personal spending in March.

The Commerce Department said personal spending edged up by 0.1 percent in March after rising by an upwardly revised 0.2 percent in February. Spending had been expected to increase by 0.2 percent.

Meanwhile, the report also said personal income climbed by 0.4 percent in March after inching up by a downwardly revised 0.1 percent in February. Economists had been expecting income to rise by 0.3 percent.

With income rising faster than spending, the personal savings rate rose to 5.4 percent in March from 5.1 percent in February, reaching its highest level in thirteen months.

The University of Michigan also released a report showing that its consumer sentiment index for April was downwardly revised to 89.0 from the mid-month reading of 89.7.

The index subsequently came in well below the final March reading of 91.0 and is now at its lowest level since hitting 87.2 last September.

Additionally, MNI Indicators released a report showing that growth in Chicago-area business activity slowed by much more than expected in the month of April.

Negative sentiment was also generated by disappointing quarterly results from big-name companies such as oil giant Chevron (CVX).

Shares of Chevron climbed well off their worst levels but still edged down by 0.2 percent after the company reported a wider than expected first quarter loss.

Sector News

While many of the major sectors climbed well off their worst levels of the day, substantial weakness remained visible among electronic storage stocks. The NYSE Arca Disk Drive Index plunged by 4.8 percent to a two-month closing low.

Seagate Technology (STX) and Western Digital (WDC) both posted steep losses after reporting weaker than expected quarterly earnings.

Semiconductor stocks also remained stuck firmly in the red, resulting in a 2.6 percent drop by the Philadelphia Semiconductor Index. The index fell to its worst closing level in well over a month.

Skyworks Solutions (SWKS) and Microsemi (MSCC) turned in two of the sector's worst performances after reporting their quarterly results.

Biotechnology, telecom, and railroad stocks also ended the day firmly in negative territory, partly reflecting the broad based sell-off seen in morning trading.

Meanwhile, gold stocks once again bucked the downtrend by the broader markets, with the NYSE Arca Gold Bugs Index surging up by 7.2 percent. The index jumped to its best closing level in well over a year.

The strength among gold stocks came amid a sharp increase by the price of the precious metal, as gold for June delivery spiked $24.10 to $1,290.50 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday, with the Japanese markets closed for a holiday. Hong Kong's Hang Seng Index plunged by 1.5 percent, while Australia's All Ordinaries Index advanced by 0.5 percent.

Meanwhile, the major European markets all moved sharply lower on the day. While the U.K.'s FTSE 100 Index slumped by 1.3 percent, the German DAX Index and the French CAC 40 Index tumbled by 2.8 percent and 2.7 percent, respectively.

In the bond market, treasuries closed modestly higher after showing a lack of direction for much of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.9 basis points to 1.819 percent.

Looking Ahead

Next week, the Labor Department's monthly employment report is likely to be in focus as traders attempt to gauge the strength of the economy.

Reports on manufacturing and service sector activity, international trade and labor productivity may attract some attention in the days leading up the jobs report next Friday.

Earnings news will also continue to attract attention next week, with drugs giants Merck (MRK) and Pfizer (PFE) among a slew of companies due to report their quarterly results.