Stocks have moved mostly lower over the course of the trading day on Friday, partly offsetting the strong gains posted in the previous session. Lingering concerns about the financial situation in Europe are weighing on the markets along with disappointing U.S. economic data.
The major averages have been rangebound in recent trading, stuck firmly in negative territory. The Dow is down 77.83 points or 0.6 percent at 13,408.14, the Nasdaq is down 20.71 points or 0.7 percent at 3,115.89 and the S&P 500 is down 8.74 points or 0.6 percent at 1,43.41.
The weakness on Wall Street comes as traders are keeping a close eye on developments in Europe, waiting on the release of the results of stress tests of Spanish banks.
While the unveiling of Spain's budget for 2013 contributed to the rally that was seen on Thursday, analysts have noted that the country still faces difficult times ahead.
Peter Boockvar, managing director at Miller Tabak, said, "The initial reaction yesterday was that maybe the Spanish news was enough to satisfy any potential conditions brought upon them with an eventual bailout request. Either way, Spain will be asking for help."
"Noon time we'll see how much money the Spanish banking system will be thought to need for recaps, with 60 billion euros expected," he added. "The ESM though won't give Spain the money until banking oversight in the Euro zone is up and running and that may not be until 2013."
Further selling pressure was generated by a report from the Institute for Supply Management - Chicago showing an unexpected contraction in Chicago-area business activity in the month of September.
The ISM Chicago said its business barometer dropped to 49.7 in September from 53.0 in August, with a reading below 50 indicating a contraction in business activity. With the drop, the barometer fell to its lowest level in three years.
A separate report from Reuters and the University of Michigan showed that consumer sentiment improved by less than previously estimated in September, although the consumer sentiment index was still at a four-month high.
Before the start of trading, the Commerce Department released a report showing that personal income edged up by just 0.1 percent in August, matching the downwardly revised increase reported for July.
The report also showed that personal spending rose by 0.5 percent in August, although the increase was largely due to higher gas prices. When adjusted to remove price changes, spending edged up by just 0.1 percent.
Among individual stocks, Nike (NKE) has come under pressure after the athletic apparel giant reported stronger than expected first quarter results but also reported future orders that trailed estimates on weak demand from China. Shares of Nike are down by 1.5 percent.
Reflecting concerns about the outlook for global demand, steel stocks have come under considerable selling pressure on the day. The NYSE Arca Steel Index has fallen by 1.8 percent, extending the sharp downward move seen throughout the past two weeks.
ArcelorMittal (MT) and Cliffs Natural Resources (CLF) are turning in two of the steel sector's worst performances, falling by 3.7 percent and 2.8 percent, respectively.
Networking stocks are also seeing significant weakness in mid-day trading, dragging the NYSE Arca Networking Index down by 1.7 percent. Adtran (ADTN) is leading the sector lower after cutting its third quarter guidance.
Brokerage, trucking, and oil stocks are also posting notable losses, moving to the downside along with most of the major sectors.
In overseas trading, stock market across the Asia-Pacific region moved mostly higher on Friday, although Japanese stocks bucked the uptrend. While Japan's Nikkei 225 Index fell by 0.9 percent, Hong Kong's Hang Seng Index rose 0.4 percent and China's Shanghai Composite Index jumped 1.5 percent.
Meanwhile, the major European markets turned lower over the course of the trading day. The French CAC 40 Index tumbled 2.4 percent, while German DAX Index fell by 1 percent and the U.K.'s FTSE 100 Index dropped 0.7 percent.
In the bond market, treasuries are moving moderately higher after ending a recent winning streak on Thursday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.5 basis points at 1.615 percent.
by RTT Staff Writer
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