Stocks Close Lower As FBI Re-Opens Clinton Email Investigation - U.S. Commentary

(RTTNews) - With traders digesting significant news on a number of different fronts, stocks fluctuated over the course of the trading session on Friday before closing mostly lower. The Nasdaq and the S&P 500 hit their lowest closing levels in over a month.

The major averages ended the day in the red but off their lows of the session. The Dow edged down 8.49 points or 0.1 percent to 18,161.19, the Nasdaq fell 25.87 points or 0.5 percent to 5,190.10 and the S&P 500 dipped 6.63 points or 0.3 percent to 2,126.41.

For the week, the major averages turned in a mixed performance. While the Dow inched up by 0.1 percent, the Nasdaq tumbled by 1.3 percent and the S&P 500 slid by 0.7 percent.

The lower close on Wall Street partly reflected a negative reaction to news the FBI is re-opening its investigation into Hillary Clinton's use of a private email server while Secretary of State.

FBI Director James Comey sent a letter to several lawmakers who chair relevant committees to inform them that the FBI has learned of the existence of new emails that appear to be pertinent to the investigation.

The news has led to renewed uncertainty about the outcome of the upcoming presidential election, which previously seemed likely to result in a Clinton victory.

Earlier in the day, traders were reacting to the latest batch of economic and earnings news, with a report from the Commerce Department showing that U.S. economic activity increased by more than expected in the third quarter.

The report said real gross domestic product climbed by 2.9 percent in the third quarter after rising by 1.4 percent in the second quarter. Economists had expected 2.5 percent growth.

The stronger than expected GDP growth in the third quarter reflects the biggest increase since a 5.0 percent jump in the third quarter of 2014.

The data generated some optimism about the economy while also increasingly the likelihood of a near-term interest rate hike by the Federal Reserve.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The bigger than expected 2.9% annualized gain in third-quarter GDP growth confirms that the economic recovery has regained some of the momentum lost within the last year."

"As such, this leaves the Fed firmly on track to raise interest rates in December and a hike at next week's FOMC meeting isn't entirely out of the question," he added.

Meanwhile, a separate report from the University of Michigan showed that consumer sentiment deteriorated by more than previously estimated in the month of October.

The University of Michigan said its consumer sentiment index for October was downwardly revised to 87.2 from the preliminary reading of 87.9. The index is down from September's final reading of 91.2.

The downward revision came as a surprise to economists, who had expected the consumer sentiment index to be upwardly revised to 88.5.

On the earnings front, shares of Amazon (AMZN) moved notably lower after the online retailer reported third quarter earnings that came in below estimates.

Energy giant Exxon Mobil (XOM) also came under pressure after reporting better than expected third quarter earnings but on revenues that came in below analyst estimates.

Meanwhile, rival Chevron (CVX) moved to the upside after reporting third quarter results that exceeded expectations on both the top and bottom lines.

Shares of Hershey (HSY) also moved sharply higher after the chocolate maker reported better than expected third quarter results.

Sector News

Energy stocks came under pressure over the course of the session amid a notable decrease by the price of crude oil. Crude for December delivery slid $1.02 to $48.70 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index slumped by 2.2 percent and 2.3 percent, respectively.

Significant weakness was also visible among pharmaceutical stocks, as reflected by the 2.1 percent drop by the NYSE Arca Pharmaceutical Index. The index fell to its lowest closing level in over eight months.

Novo Nordisk (NVO) posted a steep loss after the company reported stronger than expected third quarter profit growth but slashed its long-term growth forecast.

Retail, health care, and telecom stocks also came under pressure on the day, contributing to the lower close by the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index advanced by 0.6 percent, while Hong Kong's Hang Seng Index dropped by 0.8 percent.

The major European markets also ended the day mixed. While the German DAX Index edged down by 0.2 percent, the U.K.'s FTSE 100 Index inched up by 0.1 percent and the French CAC 40 Index rose by 0.3 percent.

In the bond market, treasuries recovered from early weakness to end the day near the unchanged line. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by less than a basis point to 1.845 percent.

Looking Ahead

The Federal Reserve is likely to be in the spotlight next week, with the central bank due to announce its latest monetary policy decision next Wednesday.

While the Fed is widely expected to remain on hold ahead of the impending elections, analysts have suggested the accompanying statement could further hint at the likelihood of a rate hike in December.

The monthly jobs data is also likely to attract attention next week along with reports on personal income and spending, manufacturing and service sector activity, and international trade.

Earnings news will also remain in focus, as Facebook (FB), Pfizer (PFE), Kellogg (K), Electronic Arts (EA) Time Warner (TWX), and Starbucks (SBUX) are among the companies due to report their quarterly results next week.