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U.S. Stocks Close Firmly Negative On Worries About Global Economy

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Stocks moved mostly lower over the course of the trading day on Friday, more than offsetting the modest gains posted in the previous session. The major averages all finished the session firmly in negative territory.

The Dow saw further downside going into the close, ending the day down 255.68 points or 1 percent at 26,770.20. The Nasdaq climbed off its worst levels but still slid 67.31 points or 0.8 percent to 8,089.54 and the S&P 500 fell 11.75 points or 0.4 percent to 2,986.20.

The major averages turned in a mixed performance for the week. The Dow dipped by 0.2 percent, while the Nasdaq and the S&P 500 rose by 0.4 percent and 0.5 percent, respectively.

The weakness on Wall Street partly reflected concerns about the global economic outlook following the release of disappointing Chinese data.

Data from the National Bureau of Statistics showed China's economy grew at the slowest rate in nearly three decades in the third quarter, raising pressure on policymakers to roll out more stimulus.

China's GDP grew 6 percent year-on-year in the third quarter after rising 6.2 percent in the second quarter. This was the slowest growth since the early 1990s. Growth was forecast to slow marginally to 6.1 percent.

In U.S. economic news, the Conference Board released a report showing an unexpected drop by its reading on leading U.S. economic indicators in the month of September.

The Conference Board said its leading economic index edged down by 0.1 percent in September after dipping by a revised 0.2 percent in August.

Economists had expected the index to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board, said the drop by the index reflected weaknesses in the manufacturing sector and the interest rate spread, which were only partially offset by rising stock prices and a positive contribution from the Leading Credit Index.

"The LEI reflects uncertainty in the outlook and falling business expectations, brought on by the downturn in the industrial sector and trade disputes," said Ozyildirim.

He added, "Looking ahead, the LEI is consistent with an economy that is still growing, albeit more slowly, through the end of the year and into 2020."

Lingering uncertainty about a possible U.S.-China trade deal and questions about the Brexit deal getting through parliament also weighed on the markets.

Sector News

Oil service stocks showed a notable downturn over the course of the trading session, dragging the Philadelphia Oil Service Index down by 1.8 percent.

The pullback by oil service stocks came as the price of crude oil turned lower, with crude for November edging down $0.15 to $53.78 a barrel after reaching a high of $54.62 a barrel.

Significant weakness was also visible among software stocks, as reflected by the 1.7 percent drop by the Dow Jones U.S. Software Index. The index continue to pull back after ending Tuesday's trading at its best closing level in well over two months.

Natural gas, semiconductor and tobacco stocks also saw considerable weakness on the day, while some strength emerged among banking and commercial real estate stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday, although Japan's Nikkei 225 Index bucked the downtrend and edged up by 0.2 percent. China's Shanghai Composite Index slumped by 1.3 percent and Hong Kong's Hang Seng Index fell by 0.5 percent.

The major European markets also moved to the downside over the course of the session. While the French CAC 40 Index slid by 0.7 percent, the U.K.'s FTSE 100 Index fell by 0.4 percent and the German DAX Index dipped by 0.2 percent.

In the bond market, treasuries pulled back off their best levels but ended the day slightly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1 basis point to 1.747 percent.

Looking Ahead

Earnings season gets into full swing next week, with a slew of big-name companies scheduled to release their quarterly results.

McDonald's (MCD), Procter & Gamble (PG), UPS (UPS), Caterpillar (CAT), eBay (EBAY), Ford (F), Microsoft (MSFT), Tesla (TSLA), Twitter (TWTR), Amazon (AMZN), and Intel (INTC) are just a few of the companies due to report their results.

Next week's economic calendar is relatively light, although traders are likely to keep an eye on report on new and existing home sales and durable goods orders.

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