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U.S. Stocks Close Mixed Following Extremely Volatile Session

wallstreet aug31 26feb21 lt

Following the sell-off seen in the previous session, stocks saw considerable volatility over the course of the trading day on Friday. While a rebound by tech stocks contributed to an advance by the Nasdaq, the Dow posted a steep loss.

The Nasdaq climbed 72.91 points or 0.6 percent to 13,192.34 after ending Thursday's trading at its lowest closing level in a nearly month. Meanwhile, the Dow plunged 469.64 points or 1.5 percent to 30,932.37 and the S&P 500 fell 18.19 points or 0.5 percent to 3,811.15.

Despite the mixed performance on the day, the major averages moved notably lower for the week. The Nasdaq plummeted by 4.9 percent, the S&P 500 tumbled by 2.4 percent and the Dow slumped by 1.8 percent.

The volatility seen over the course of the trading session came as traders kept a close eye on activity in the bond markets following the recent spike in yields.

Yields also fluctuated as the day progressed, rebounding near the unchanged line after seeing early weakness before moving to the downside in afternoon trading.

The fluctuations in the bond markets came following the release of another batch of largely upbeat U.S. economic data.

A report from the Commerce Department showed U.S. personal income skyrocketed in the month of January, reflecting the issuance of $600 stimulus checks.

The Commerce Department said personal income spiked by 10.0 percent in January after rising by 0.6 percent in December. Economists had expected personal income to soar by 9.5 percent.

The report also showed a significant rebound in personal spending, which surged up by 2.4 percent in January after falling by a revised 0.4 percent in December.

Economists had expected personal spending to jump by 2.5 percent compared to the 0.2 percent dip originally reported for the previous month.

However, the report also showed inflation remained relatively tame. A reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth ticked up to 1.5 percent in January from 1.4 percent in December.

Concerns about inflation have recently weighed on treasuries despite Fed Chair Jerome Powell's repeated assurances the central bank plans to maintain interest rates at near-zero levels for the foreseeable future.

A steep drop by shares of Salesfore (CRM) weighed on the Dow, with the business software company tumbling by 6.3 percent after reporting better than expected fourth quarter results but providing a disappointing profit forecast.

Sector News

Gold stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 4.8 percent to its lowest closing level in ten months.

The sell-off by gold stocks came amid a steep drop by the price of the precious metal, with gold for April delivery plunging $46.60 to $1,728.90 an ounce.

Significant weakness was also visible among steel stocks, as reflected by the 3.1 percent slump by the NYSE Arca Steel Index. The index pulled back further off the nearly nine-year closing high set on Wednesday.

Energy stocks also saw considerable weakness amid a sharp pullback by the price of crude oil, moving notably lower along with banking, utilities and commercial real estate stocks.

On the other hand, semiconductor stocks showed a strong move to the upside on the day, driving the Philadelphia Semiconductor Index up by 2.3 percent.

Other Markets

In overseas trading, stocks markets across the Asia-Pacific region moved sharply lower during trading on Friday. Japan's Nikkei 225 Index showed a 4 percent nosedive, while China's Shanghai Composite Index slumped by 2.1 percent.

The major European markets also showed notable moves to the downside on the day. While the U.K.'s FTSE 100 Index plunged by 2.5 percent, the French CAC 40 Index tumbled by 1.4 percent and the German DAX Index fell by 0.7 percent.

In the bond market, treasuries fluctuated over the course of the session before closing notably higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.8 basis points to 1.460 percent.

Looking Ahead

The Labor Department's closely watched monthly jobs report is likely to be in the spotlight next week, while reports on manufacturing and service sector activity, factory orders and the U.S. trade deficit may also attract some attention.

The Federal Reserve is also scheduled to release its Beige Book, a compilation of economic evidence from the twelve Fed districts.

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