U.S. Stocks Seeing Further Downside In Afternoon Trading

wallstreet oct04 14jan22 lt

Stocks have moved significantly lower over the course of the trading day on Friday, extending the sharp pullback seen in the previous session. The major averages have all slid firmly into negative territory, with the Dow showing a notable drop.

The major averages have seen further downside in recent trading, hitting new lows for the session. The Dow is down 447.19 points or 1.2 percent at 35,666.43, the Nasdaq is down 108.80 points or 0.7 percent at 14,698.01 and the S&P 500 is down 41.02 points or 0.9 percent at 4,618.01.

A steep drop by JPMorgan Chase (JPM) is weighing on the Dow, with the financial giant tumbling by 6.3 percent despite reporting better than expected fourth quarter earnings.

Citigroup (C) has also moved notably lower after reporting a significant decrease in fourth quarter profits, while Wells Fargo (WFC) has moved to the upside after reporting fourth quarter results that beat estimates on both the top and bottom lines.

Traders are also reacting to a slew of U.S. economic data, including a Commerce Department report unexpectedly showing a steep drop in U.S. retail sales in the month of December.

The Commerce Department said retail sales tumbled by 1.9 percent in December after edging up by a revised 0.2 percent in November.

The sharp pullback surprised economists, who had expected retail sales to come in unchanged compared to the 0.3 percent growth originally reported for the previous month.

Michael Pearce, Senior U.S. Economist at Capital Economics, said the unexpected slump in retail sales appears to mainly reflect the ongoing impact of higher prices and supply shortages.

Inflation concerns have also contributed to a bigger than expected drop in U.S. consumer sentiment in the month of January, according to preliminary data released by the University of Michigan on Friday.

The report showed the consumer sentiment index fell to 68.8 in January from 70.6 in December. Economist had expected the index to edge down to 70.0.

The Federal Reserve also released a report unexpectedly showing a modest decrease in U.S. industrial production in the month of December.

The Fed said industrial production edged down by 0.1 percent in December after climbing by an upwardly revised 0.7 percent in November.

Economists had expected industrial production to rise by 0.4 percent compared to the 0.5 percent increase originally reported for the previous month.

Sector News

Airline stocks have moved sharply lower over the course of the session, resulting in a 2.7 percent nosedive by the NYSE Arca Airline Index. The index is pulling back after ending the previous session at its best closing level in almost two months.

Substantial weakness is also visible among interest-rate sensitive housing and commercial real estate stocks, with the Philadelphia Housing Sector Index and the Dow Jones U.S. Real Estate Index slumping by 2.1 percent and 2.1 percent, respectively.

Retail stocks are also see significant weakness following the disappointing retail sales data, dragging the Dow Jones U.S. Retail Index down by 1.9 percent.

Brokerage, chemical and gold stocks have also moved notably lower, while energy stocks are bucking the downtrend amid a sharp increase by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved significantly lower during trading on Friday. Japan's Nikkei 225 Index tumbled by 1.3 percent, while China's Shanghai Composite Index slumped by 1 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.3 percent, the German DAX Index and the French CAC 40 Index slid by 0.8 percent and 0.9 percent, respectively.

In the bond market, treasuries have moved notably lower over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.4 basis points at 1.765 percent.

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