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Stocks Close Mostly Lower After Seeing Initial Strength - U.S. Commentary

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After failing to sustain an initial upward move, stocks moved mostly lower over the course of the trading session on Friday. With the downturn on the day, the major averages partly offset the gains posted in the previous session.

The major averages climbed off their worst levels going into the close but still ended the day in the red. The Dow slid 122.91 points or 0.5 percent to 24,360.14, the Nasdaq dropped 33.60 points or 0.5 percent to 7,106.65 and the S&P 500 fell 7.69 points or 0.3 percent to 2,656.30.

Despite the pullback on the day, the major averages moved sharply higher for the week. The Nasdaq soared by 2.8 percent, while the S&P 500 and the Dow jumped by 2 percent and 1.8 percent, respectively.

The initial strength on Wall Street came as traders reacted positively to earnings news from financial giants JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC).

Before the start of trading, JPMorgan, Citigroup, and Wells Fargo all reported first quarter earnings that came in above analyst estimates.

Buying interest waned shortly after the open, however, with traders reluctant to make significant moves ahead of a slew of earnings news next week.

Bank of America (BAC), Goldman Sachs (GS), Johnson & Johnson (JNJ), IBM (IBM), American Express (AXP), and General Electric (GE) are among the companies due to report their quarterly results.

The subsequent pullback by the markets may have been partly due to the release of a report from the University of Michigan showing a bigger than expected drop in consumer sentiment in the month of April.

The report said the preliminary reading on the consumer sentiment index for April came in at 97.8 compared to the final March reading of 101.4. Economists had expected the index to edge down to 100.5.

"Consumer sentiment slipped in early April, largely reversing the gains recorded in the prior two months," said Richard Curtin, the survey's chief economist. "The small decline was widely shared by all age and income subgroups and across all regions of the country."

He added, "Importantly, confidence still remains relatively high, despite the recent losses that were mainly due to concerns about the potential impact of Trump's trade policies on the domestic economy."

Sector News

Banking stocks showed a significant move to the downside on the day, dragging the KBW Bank Index down by 2.1 percent.

JPMorgan, Citigroup, and Wells Fargo all slid into negative territory despite reporting better than expected earnings.

Considerable weakness was also visible among brokerage stocks, as reflected by the 1.1 percent loss posted by the NYSE Arca Broker/Dealer Index.

On the other hand, gold stocks moved notably higher, driving the NYSE Arca Gold Bugs Index up by 1.7 percent. The index ended the session at its best closing level in nearly two months.

The rally by gold stocks came amid an increase by the price of the precious metal, with gold for June delivery climbing $6 to $1,347.90 an ounce.

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 climbed by 0.6 percent, while Hong Kong's Hang Seng Index edged down by 0.1 percent.

Meanwhile, the major European markets all moved modestly higher on the day. While the German DAX Index rose by 0.2 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both inched up by 0.1 percent.

In the bond market, treasuries closed roughly flat following the decline seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.829 percent.

Looking Ahead

Earnings news may drive trading next week, although reports on retail sales, housing starts, and industrial production are also likely to attract attention.

The Federal Reserve is also due to release its Beige Book, which may shed additional light on the outlook for interest rates.

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