U.S. Stocks Give Back Ground Following Yesterday's Rally

(RTTNews) - Following the strong upward move seen on Thursday, stocks gave back some ground during Friday's session. The major averages all moved to the downside, with the Dow and the S&P 500 pulling back off their best closing levels in almost two months.

The major averages regained ground late in the session but remained in negative territory. The Dow slid 143.22 points or 0.4 percent to 33,886.47, the Nasdaq fell 42.81 points or 0.4 percent to 12,123.47 and the S&P 500 dipped 8.58 points or 0.2 percent to 4,137.64.

Despite the pullback on the day, the major averages all moved higher of the week. The Dow jumped by 1.2 percent, the S&P 500 advanced by 0.8 percent and the Nasdaq rose by 0.3 percent.

The weakness that emerged on Wall Street coincided with the release of a report from the University of Michigan showing a jump in year-ahead inflation expectations in the month of April.

The preliminary report said one-year inflation expectations jumped to 4.6 percent in April from 3.6 percent in March.

"These expectations have been seesawing for four consecutive months, alternating between increases and decreases," said Surveys of Consumers Director Joanne Hsu.

She added, "Uncertainty over short-run inflation expectations continues to be notably elevated, indicating that the recent volatility in expected year-ahead inflation is likely to continue."

At the same time, five-year inflation expectations held at 2.9 percent for fifth straight month and have stayed within the narrow 2.9 to 3.1 percent range for 20 of the last 21 months.

Traders are also digesting a slew of other U.S. economic data, including a report from the Commerce Department showing retail sales fell by much more than expected in the month of March.

The Commerce Department said retail sales slumped by 1.0 percent in March after dipping by a revised 0.2 percent in February.

Economists had expected retail sales to decline by 0.4 percent, matching the decrease originally reported for the previous month.

Excluding a steep drop in sales by motor vehicle and parts dealers, retail sales still slid by 0.8 percent in March after coming in unchanged in February. Ex-auto sales were expected to dip by 0.3 percent.

A separate report from the Federal Reserve showed U.S. industrial production increased by more than expected in March, although the increase was largely due to a spike in utilities output.

Sector News

Gold stocks showed a significant move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 2.1 percent. The index ended the previous session at its best closing level in eleven months.

The pullback by gold stocks came amid a steep drop by the price of the precious metal, as gold for June delivery plunged $39.50 to $2,015.80 an ounce.

Interest rate-sensitive commercial real estate and utilities stocks also saw considerable weakness on the day, with the Dow Jones U.S. Real Estate Index and the Dow Jones Utility Average falling by 1.6 percent and 1.3 percent, respectively.

Airline, telecom and tobacco stocks also saw notable weakness on the day, while some strength was visible among banking stocks.

Financial giant JPMorgan Chase (JPM) posted a standout gain after reporting record quarterly revenue that exceeded analyst estimates.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index shot up by 1.2 percent, while China's Shanghai Composite Index climbed by 0.6 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the German DAX Index and the French CAC 40 Index both advanced by 0.5 percent.

In the bond market, treasuries extended the downward trend seen over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 7 basis points to 3.522 percent.

Looking Ahead

Following a busy week on the U.S. economic front, the calendar for next week is relatively quiet, although traders are likely to keep an eye on reports on the latest housing data as well as the Federal Reserve's Beige Book.

Earnings news may take the spotlight, with Bank of America (BAC), Goldman Sachs (GS), Johnson & Johnson (JNJ), Netflix (NFLX), Morgan Stanley (MS), IBM Corp. (IBM), Tesla (TSLA), and AT&T (T) among the companies due to report their quarterly results.