Stocks turned in a relatively lackluster performance over the course of the trading day on Friday as traders digested a report showing somewhat weaker than expected U.S. economic growth in the final three months of last year.
The major averages eventually ended the session mixed, with the tech-heavy Nasdaq closing in positive territory. The Nasdaq rose 11.27 points or 0.4 percent to 2,816.55, while the Dow fell 74.17 points or 0.6 percent to 12,660.46 and the S&P 500 slipped 2.11 points or 0.2 percent to 1,316.32.
For the week, the major averages also turned in a mixed performance. While the Dow fell by 0.5 percent, the Nasdaq advanced by 1.1 percent and the S&P 500 edged up by 0.1 percent.
Before the start of trading, the Commerce Department said GDP increased at an annual rate of 2.8 percent in the fourth quarter compared to the 1.8 percent growth seen in the third quarter.
Although GDP growth showed a notable acceleration compared to the previous quarter, economists had been expecting an increase of about 3.1 percent.
Economists were also disappointed that much of the GDP growth in the fourth quarter was due to a positive contribution from private inventory investment
Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The much bigger than expected positive contribution from inventories in Q4 leaves us even more convinced that growth will slow again to a sub-2% rate in Q1 of this year."
However, an upbeat report on consumer sentiment in the month of January helped to offset some of the negative sentiment generated by the GDP report.
Reuters and the University of Michigan said their consumer sentiment index for January was upwardly revised to a reading of 75.0 from the mid-month reading of 74.0, coming in well above the final December reading of 69.9.
The upwardly revised reading also marks an eleven-month high for the consumer sentiment index, which is at its best level since coming in at 77.5 last February.
Among individual stocks, auto giant Ford (F) fell by 4.2 percent after reporting weaker than expected fourth quarter earnings due to weakness overseas.
Procter & Gamble (PG) also ended the day in the red after the consumer products giant reported a sharp drop in fourth quarter earnings and lowered its full-year earnings guidance.
Meanwhile, Honeywell (HON) rose by 0.8 percent after reporting fourth quarter earnings that came in just above analyst estimates on revenues that came in slightly below expectations.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Friday, although Japan's Nikkei 225 Index bucked the uptrend and edged down by 0.1 percent. Hong Kong's Hang Seng Index rose by 0.3 percent, while Australia's All Ordinaries Index closed up by 0.5 percent.
Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index slipped 0.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index fell by 1.1 percent and 1.3 percent, respectively.
In the bond market, treasuries moved to the upside going into the close, ending the day firmly in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.3 basis points to 1.898 percent.
Despite the lackluster performance by the broader markets, significant strength was visible among gold stocks. Reflecting the strength in the gold sector, the NYSE Arca Gold Bugs Index jumped 2.4 percent to its best closing level in well over a month.
The strength among gold stocks came amid a continued increase by the price of the precious metal, which also reached its highest closing level in over a month. Gold for February delivery ended the day up $5.50 at $1,732.20 an ounce.
Airline stocks also showed a strong move to the upside on the day, extending a recent upward move. The NYSE Arca Airline surged up by 2.1 percent to a six-month closing high.
Considerable strength also emerged among health insurance stocks, as reflected by the 2.2 percent gain posted by the Morgan Stanley Healthcare Payor Index. Healthcare provider, electronic storage, and oil service stocks also posted notable gains.
Meanwhile, tobacco stocks came under pressure on the day, dragging the NYSE Arca Tobacco Index down by 1.6 percent. Cigarette maker Altria Group (MO) fell by 1.8 percent after reporting fourth quarter earnings that fell year-over-year and announcing that its CEO will retire in May.
Utilities stocks also saw significant weakness, resulting in a 1.3 percent drop by the Dow Jones Utilities Average. American Electric Power (AEP) and Public Service Enterprise Group (PEG) turned in two of the sector's worst performances.
U.S. employment data is likely to be in focus next week, with the Labor Department due to release its monthly employment report on Friday.
Ahead of the monthly jobs report, traders are likely to keep an eye on reports on personal income and spending, consumer confidence, manufacturing activity, and weekly jobless claims.
On the earnings front, Exxon Mobil (XOM), Pfizer (PFE), UPS (UPS), Whirlpool (WHR), Hershey (HSY), Aetna (AET), Dow Chemical (DOW), and Merck (MRK) are among the companies due to report their quarterly results next week.
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