After showing a strong upward move over the course of the previous session, stocks gave back some ground during trading on Friday. Selling pressure waned as the day progressed, however, and the major averages ended the session well off their worst levels.
The major averages moved roughly sideways going into the close, stuck in negative territory. The Dow fell 48.84 points or 0.4 percent to 13,437.13, the Nasdaq slid 20.37 points or 0.7 percent to 3,116.23 and the S&P 500 dropped 6.48 points or 0.5 percent to 1,440.67.
For the week, the major averages all posted notable losses. The Nasdaq tumbled by 2 percent, while the Dow and the S&P 500 fell by 1 percent and 1.3 percent, respectively. Nonetheless, the major averages all showed upward moves for the month of September and the third quarter.
The moderately lower close on Wall Street on Friday came amid lingering concerns about Europe as well as the release of disappointing U.S. economic data, including a report showing an unexpected contraction in Chicago-area business activity in the month of September.
The Institute for Supply Management - Chicago said its business barometer dropped to 49.7 in September from 53.0 in August, with a reading below 50 indicating a contraction in business activity. With the drop, the barometer fell to its lowest level in three years.
A separate report from Reuters and the University of Michigan showed that consumer sentiment improved by less than previously estimated in September, although the consumer sentiment index was still at a four-month high.
Before the start of trading, the Commerce Department released a report showing that personal income edged up by 0.1 percent in August, matching the downwardly revised increase reported for July.
The report also showed that personal spending rose by 0.5 percent in August, although the increase was largely due to higher gas prices. When adjusted to remove price changes, spending inched up by just 0.1 percent.
However, a positive reaction to the results of a stress test of Spanish banks helped to lift stocks off their lows, with the results coming in roughly in line with estimates.
The results of the stress test showed that Spanish banks have a combined capital shortfall of 59.3 billion euros compared to estimates for about 60 billion euros.
Among individual stocks, Nike (NKE) ended the day in the red after the athletic apparel giant reported stronger than expected first quarter results but also reported future orders that trailed estimates on weak demand from China. Shares of Nike fell by 1.1 percent.
Steel stocks saw significant weakness on the day amid continued concerns about the outlook for global demand. The NYSE Arca Steel Index fell by 1.4 percent, extending the sharp downward move seen throughout the past two weeks.
ArcelorMittal (MT) and L.B. Foster (FSTR) turned in two of the steel sector's worst performances, sliding 3.6 percent and 3.2 percent, respectively.
Considerable weakness was also visible among networking stocks, as reflected by the 1.5 percent loss posted by the NYSE Arca Networking Index. Adtran (ADTN) helped to lead the sector lower, tumbling by 9.8 percent after cutting its third quarter guidance.
Housing stocks also showed a notable move to the downside, dragging the Philadelphia Housing Sector Index down by 1.5 percent.
Tobacco, airline, and trucking stocks also came under pressure, while most of the other major sectors ended the day showing relatively modest moves.
In overseas trading, stock market across the Asia-Pacific region moved mostly higher on Friday, although Japanese stocks bucked the uptrend. While Japan's Nikkei 225 Index fell by 0.9 percent, Hong Kong's Hang Seng Index rose 0.4 percent and China's Shanghai Composite Index jumped 1.5 percent.
Meanwhile, the major European markets turned lower over the course of the trading day. The French CAC 40 Index tumbled 2.4 percent, while German DAX Index fell 1 percent and the U.K.'s FTSE 100 Index dropped 0.7 percent.
In the bond market, treasuries ended the day nearly flat after failing to sustain an early upward move. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.637 percent.
Next week, trading is likely to be driven by two key events, a European Central Bank meeting on Thursday and the Labor Department's monthly U.S. jobs report on Friday.
Ahead of those two major headlines, trading could be impacted by the release of reports on construction spending, manufacturing and service sector activity, and private sector employment.
The Federal Reserve is also scheduled to release the minutes of its latest monetary policy meeting, and traders may be interested in the discussions that led up to the decision to provide further stimulus. (RTTNews)
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