U.S. Close Mostly Lower On Late-Day Weakness

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Stocks showed a lack of direction throughout much of the trading session on Friday before coming under pressure going into the close. The major averages moved notably lower in late-day trading after spending most of the session bouncing back and forth across the unchanged line.

The major averages finished the day just off their lows of the session. The Dow slumped 305.02 points or 0.9 percent to 33,476.46, the Nasdaq slid 77.39 points or 0.7 percent to 11,004.62 and the S&P 500 fell 29.13 points or 0.7 percent to 3,934.38.

With the pullback on the day, the major averages posted steep losses for the week. The Dow tumbled by 2.8 percent, the S&P 500 and the Nasdaq plunged by 3.4 percent and 4.0 percent, respectively.

The late-day weakness on Wall Street came as traders looked ahead to next week's highly-anticipated Federal Reserve meeting.

While the Fed is widely expected to slow the pace of interest rate hikes to 50 basis points, traders have recently expressed concerns about how much further the Fed will need to raise rates in order to contain inflation.

Traders are likely to pay close attention to the Fed's accompanying statement, although a lot of key data will be released before the next meeting in late January/early February.

Adding to concerns about the outlook for interest rates, the Labor Department released a report showing U.S producer prices increased by more than expected in the month of November.

The Labor Department said its producer price index for final demand rose by 0.3 percent in November, matching upwardly revised increases in October and September.

Economists had expected producer prices to inch up by 0.1 percent compared to the 0.2 percent uptick originally reported for the previous month.

However, the negative sentiment was partly offset by a report from the University of Michigan showing a decrease in consumers' inflation expectations.

The report showed one-year inflation expectations fell to a fifteen-month low of 4.6 percent in December from 4.9 percent in November, although five-year inflation expectations held at 3.0 percent.

"Declines in short-run inflation expectations were visible across the distribution of age, income, education, as well as political party identification," said Surveys of Consumers Director Joanne Hsu.

Sector News

Energy stocks moved sharply lower over the course of the session, with a continued decrease by the price of crude oil weighing on the sector.

With crude for January delivery falling $0.44 to $71.02 a barrel, the Philadelphia Oil Service Index plunged by 3.8 percent and the NYSE Arca Oil Index dove by 2.2 percent.

Considerable weakness also emerged among biotechnology stocks, as reflected by the 1.7 percent slump by the NYSE Arca Biotechnology Index.

Networking, gold and healthcare stocks also showed significant moves to the downside as the trading day progressed.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index jumped by 1.2 percent, while Hong Kong's Hang Seng Index surged by 2.3 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index climbed by 0.5 percent and the German DAX Index advanced by 0.7 percent.

In the bond market, treasuries extended the notable pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 7.6 basis points to 3.567 percent.

Looking Ahead

While the Fed decision is likely to be in the spotlight next week, traders are also likely to keep an eye on reports on consumer prices, import and export prices, retail sales and industrial production.

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