Stocks Close Lower Ahead Of Next Week's Fed Meeting - U.S. Commentary

(RTTNews) - While selling pressure was relatively subdued, stocks saw moderate weakness during trading on Friday. The pullback on the day came on the heels of the substantial upward move that was seen over the course of the previous session.

The major averages ended the session in the red but well off their worst levels of the day. The Dow fell 88.68 points or 0.5 percent to 18,123.80, the Nasdaq edged down 5.12 points or 0.1 percent to 5,244.57 and the S&P 500 dipped 8.10 points or 0.4 percent to 2,139.16.

For the week, the Nasdaq surged up by 2.3 percent, while the S&P 500 rose by 0.5 percent and the Dow crept up by 0.2 percent.

Profit taking contributed to the weakness on Wall Street, as some traders cashed in on the strong gains posted on Thursday.

Negative sentiment was also generated by a report from the Labor Department showing that U.S. consumer prices rose by slightly more than expected in August.

The Labor Department said its consumer price index rose by 0.2 percent in August after coming in unchanged in July. Economists had expected prices to inch up by 0.1 percent.

Excluding food and energy prices, core consumer prices climbed by 0.3 percent in August after edging up by 0.1 percent in July. Core prices had been expected to rise by 0.2 percent.

Compared to the same month a year ago, the headline consumer price index was up by 1.1 percent in August, reflecting an acceleration from the 0.8 percent growth in July.

The annual rate of core consumer price growth also accelerated to 2.3 percent in August from 2.2 percent in the previous month.

The data led to renewed concerns about the outlook for interest rates, although analysts largely said the report will not be enough to push the Federal Reserve to raise rates next week.

The Fed is scheduled to hold a two-day monetary policy beginning next Tuesday, with its decision due to be announced next Wednesday afternoon.

Sector News

Gold stocks came under pressure over the course of the trading session, dragging the NYSE Arca Gold Bugs Index down by 2 percent.

The weakness in the gold sector came amid a decrease by the price of the precious metal, as gold for December delivery slid $7.80 to $1,310.20 an ounce.

Considerable weakness was also visible among airline stocks, as reflected by the 1.9 percent drop by the NYSE Arca Airline Index. SkyWest (SKYW) and Avianca (AVH) turned in two of the sector's worst performances.

Housing, steel, and financial stocks also saw notable weakness on the day, while most of the other major sectors showed more modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday, although several markets were closed for holidays. Japan's Nikkei 225 Index advanced by 0.7 percent, while Australia's All Ordinaries Index shot up by 1.1 percent.

Meanwhile, the major European markets moved to the downside on the day. While the German DAX Index slumped by 1.5 percent, the French CAC 40 Index slid by 0.9 percent and the U.K.'s FTSE 100 Index fell by 0.3 percent.

In the bond market, treasuries spent much of the day lingering near the unchanged line before closing nearly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.701 percent.

Looking Ahead

The Fed announcement will be in the spotlight next week, likely overshadowing a trio of reports on the strength of the house market.