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Stocks Move Notably Lower As Apple Extends Decline - U.S. Commentary


Stocks moved notably lower over the course of the trading session on Friday, adding to the losses posted in the previous session. With the drop, the Dow pulled back further off the one-month closing high it set on Tuesday.

The major averages climbed off their worst levels going into the close but remained firmly negative. The Dow slid 201.95 points or 0.8 percent to 24,462.94, the Nasdaq tumbled 91.93 points or 1.3 percent to 7,146.13 and the S&P 500 slumped 22.99 points or 0.9 percent to 2,670.14.

Despite the weakness on the day, the major averages closed higher for the week. The Dow rose by 0.4 percent, while the Nasdaq and the S&P 500 climbed by 0.6 percent and 0.5 percent, respectively.

A continued decline by Apple (AAPL) weighed on the markets, with the tech giant slumping by 4.1 percent after tumbling by 2.8 percent on Thursday.

Apple remained under pressure after an analyst at Morgan Stanley warned of disappointing iPhone sales in the June quarter.

On the other hand, shares of General Electric (GE) moved sharply higher after the conglomerate reported better than expected adjusted first quarter earnings.

Industrial giant Honeywell (HON) also saw some strength after reporting first quarter results that beat estimates and raising its full-year guidance.

The downward move may have been exaggerated somewhat by below average volume, as some traders remained on the sidelines amid a lack of major U.S. economic data.

Next week, traders are likely to keep a close eye on reports on new and existing home sales, consumer confidence, durable goods orders and first quarter GDP.

The earnings season also kicks into high gear next week, as a slew of big-name companies are due to release their quarterly results.

Google parent Alphabet (GOOGL), Intel (INTC), Microsoft (MSFT), Coca-Cola (KO), Boeing (BA), and Verizon (VZ) are among the companies due to release their results next week.

Sector News

Extending a recent sell-off, tobacco stocks showed a significant move to the downside on the day. Reflecting the weakness in the sector, the NYSE Arca Tobacco Index fell by 1.6 percent to its lowest closing level in over two months.

Tobacco stocks have fallen sharply in recent sessions amid concerns about the impact of the growing popularity of alternatives such as electronic cigarettes.

Retail stocks also moved considerably lower over the course of the session, dragging the Dow Jones Retail Index down by 1.3 percent. The index continued to give back ground after ending Wednesday's trading at its best closing level in almost a month.

Semiconductor, housing, and computer hardware stocks also saw notable weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index edged down by 0.1 percent, while Hong Kong's Hang Seng Index slumped by 0.9 percent.

Meanwhile, the major European markets turned in another mixed performance on the day. While the German DAX Index dipped by 0.2 percent, the French CAC 40 Index rose by 0.4 percent and the U.K.'s FTSE 100 Index climbed by 0.5 percent.

In the bond market, treasuries extended the notable decline seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.7 basis points to 2.951 percent.

Looking Ahead

As mentioned above, a number of big-name companies are scheduled to release their quarterly results next week, although traders are also likely to keep an eye on the latest economic data.

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