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Major Averages Close Mixed For The Session And The Week - U.S. Commentary


After failing to sustain an early move to the upside, stocks turned mixed over the course of the trading session on Friday. The major averages pulled back well off their highs of the session, with the Nasdaq and the S&P 500 ending the day in negative territory.

While the Dow rose 64.89 points or 0.3 percent to 25,444.34, the Nasdaq fell 36.11 points or 0.5 percent to 7,449.03 and the S&P 500 edged down 1.00 points or less than a tenth of a percent to 2.767.78.

The major averages also turned in a mixed performance for the week. The Nasdaq fell by 0.6 percent, while the Dow rose by 0.4 percent and the S&P 500 was nearly flat.

Early buying interest was generated by a rally by Chinese stocks, which rebounded strongly from an initial move to the downside despite disappointing GDP data.

Data showed Chinese GDP climbed an annual 6.5 percent in the third quarter, shy of estimates for 6.6 percent and down from 6.7 percent in the previous quarter.

However, investors reacted positively after three top Chinese financial regulators stepped in to bolster investor confidence.

The heads of the People's Bank of China, the Securities Regulatory Commission and the Banking and Insurance Regulatory Commission all issued statements expressing support for the markets.

A positive reaction to upbeat earnings news from big-name companies such as Procter & Gamble (PG), American Express (AXP) and Honeywell (HON) also contributed to the early strength on Wall Street.

Traders seemed reluctant to make more significant moves, however, as concerns about rising interest rates and tension between the U.S. and Saudi Arabia continued to weigh on the markets.

Meanwhile, traders largely shrugged off a report from the National Association of Realtors showing a much steeper than expected drop in existing home sales in the month of September.

NAR said existing home sales plunged by 3.4 percent to an annual rate of 5.15 million in September after edging down by 0.2 percent to a revised rate of 5.33 million in August. Economists had expected existing home sales to drop by 0.7 percent.

With the much bigger than expected decrease, existing home sales slumped to their lowest annual rate since November of 2015.

Sector News

Utilities stocks showed a significant move to the upside on the day, driving the Dow Jones Utilities Average up by 1.6 percent. With the gain, the average reached its best closing level in ten months.

Notable strength was also visible among telecom stocks, as reflected by the 2.2 percent advance by the NYSE Arca North American Telecom Index. The index rebounded following the pullback seen in the previous session, climbing further off the two-month closing low set last Thursday.

On the other hand, biotechnology stocks came under pressure over the course of the session, dragging the NYSE Arca Biotechnology Index down by 1.8 percent.

Oil stocks also moved to the downside despite an increase by the price of crude oil, moving notably lower along with housing, semiconductor, and networking stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index slid by 0.6 percent, while China's Shanghai Composite Index spiked by 2.6 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index rose by 0.3 percent, the German DAX Index dipped by 0.3 percent and the French CAC 40 Index fell by 0.6 percent.

In the bond market, treasuries moved to the downside after ending the previous session roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.3 basis points to 3.198 percent.

Looking Ahead

Earnings news is likely to be in the spotlight next week, as the U.S. economic calendar for the week is relatively quiet.

3M (MMM), Caterpillar (CAT), McDonald's (MCD), Verizon (VZ), AT&T (T), Boeing (BA), UPS (UPS), Ford (F), Microsoft (MSFT), Merck (MRK), Twitter (TWTR), Amazon (AMZN), and Intel (INTC) are among the slew of companies due to report their quarterly results next week.

Reports on new home sales, durable goods orders and consumer sentiment may still attract attention along with the Federal Reserve's Beige Book.

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