Stocks Close Substantially Lower Amid Overseas Concerns - U.S. Commentary

(RTTNews) - Stocks moved sharply lower over the course of the trading day on Friday, adding to the modest losses posted in the previous session. With the sell-off on the day, the markets partly offset the upward move seen over the past two weeks.

The major averages climbed off their worst levels going into the close but remained stuck firmly in the red. The Dow plunged 279.47 points or 1.5 percent to 17,826.30, the Nasdaq plummeted 75.98 points or 1.5 percent to 4,931.81 and the S&P 500 tumbled 23.81 points or 1.1 percent to 2,081.18.

With the steep drop on the day, the major averages all moved lower for the week. The Dow and the Nasdaq both dropped by 1.3 percent, while the S&P 500 slid by 1 percent.

The weakness on Wall Street was partly attributed to a sell-off in Chinese futures, which fell sharply amid concerns about new trading regulations.

Chinese regulators reportedly expanded the supply of shares available for short sellers while clamping down on over-the-counter margin trading.

The news from China contributed to notable weakness among European stocks, which were also weighed down by continued worries about Greece.

Meanwhile, traders shrugged off a report from the University of Michigan showing a bigger than expected improvement in U.S. consumer sentiment in the month of April.

The report showed that the preliminary reading on the consumer sentiment index for April came in at 95.9 compared to the final March reading of 93.0. Economists had expected the index to edge up to 94.0.

Before the start of trading, the Labor Department released a separate report showing that consumer prices rose by slightly less than expected in March.

The Labor Department said its consumer price index edged up by 0.2 percent in March, matching the increase seen in February. Economists had expected the index to rise by 0.3 percent.

Core consumer prices, which exclude food and energy prices, rose by 0.2 percent for the third consecutive month. The uptick in core prices matched economist estimates.

The annual rate of core price growth, which is closely watched by the Federal Reserve, ticked up to 1.8 percent in March from 1.7 percent in February.

Rob Carnell, chief international economist at ING, said, "Given recent activity data weakness, which has seemed to all but rule out a June rate hike, this data adds an additional, but unhelpfully contradictory inflation element to the rate hike timing debate."

"That said, it will need corroboration by activity data soon if it is not to be too late for a June hike, and that point of no return may have already been passed," he added.

Sector News

Most of the major sectors showed notable moves to the downside on the day, reflecting broad based weakness on Wall Street.

Internet stocks saw substantial weakness, dragging the Dow Jones Internet Index down by 2 percent. The pullback by the index came after it ended the previous session at a fourteen-year closing high.

Yahoo (YHOO), WebMD (WBMD), and Monster Worldwide (MWW) turned in some of the internet sector's worst performances.

Significant weakness was also visible among steel stocks, as reflected by the 1.8 percent loss posted by the NYSE Arca Steel Index. With the loss, the index continued to give back ground after ending Wednesday's trading at its best closing level in over a month.

Oil service stocks also saw considerable weakness on the day, resulting in a 1.4 percent drop by the Philadelphia Oil Service Index. The weakness in the sector came as crude oil for May delivery slid $0.97 to $55.74 a barrel.

Networking, software, retail, and banking stocks also moved notably lower, while modest strength was visible among railroad and gold stocks.

Other Markets

In oversea trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index slumped by 1.2 percent, while Hong Kong's Hang Seng Index fell by 0.3 percent.

The major European markets also came under pressure on the day. While the U.K.'s FTSE 100 Index dropped by 0.9 percent, the French CAC 40 Index tumbled by 1.6 percent and the German DAX Index plummeted by 2.6 percent.

In the bond market, treasuries moved higher over the course of the session after seeing early weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.8 basis points to 1.85 percent.

Looking Ahead

Following the slew of economic data released over the past week, the economic calendar for next week is relatively quiet.

Nonetheless, traders are likely to keep an eye on reports on weekly jobless claims, durable goods orders, and new and existing home sales.

Earnings are also likely to move into the spotlight amid the light economic calendar, with a slew of big-name companies due to release their quarterly results.

IBM (IBM), Morgan Stanley (MS), Coca-Cola (KO), McDonald's (MCD), AT&T (T), Facebook (FB), General Motors (GM), Google (GOOG), and Microsoft (MSFT) are among the companies due to report their results next week.