U.S. Stocks Close Modestly Lower Following Late-Day Volatility

After an early move to the upside, stocks saw substantial volatility in the latter part of the trading session on Friday. The major averages showed wild swings back and forth across the unchanged line before eventually ending the day modestly lower.

The tech-heavy Nasdaq edged down 12.18 points or 0.1 percent 13,211.81, its lowest closing level in over three months. The S&P 500 also dipped 9.94 points or 0.2 percent to a three-month closing low of 4,320.06, while the Dow fell 106.58 points or 0.3 percent to a two-month closing low of 33,963.84.

Largely reflecting the sell-off seen on Wednesday and Thursday, the Nasdaq showed a 3.6 percent nosedive for the week. The S&P 500 also plunged by 2.9 percent, while the Dow tumbled by 1.9 percent.

The early strength on Wall Street partly reflected bargain hunting, with traders picking up stocks at reduced levels following the sell-off seen over the two previous sessions.

Buying interest waned over the course of the session, however, as concerns about the outlook for interest rates continued to weigh on the markets.

While the Federal Reserve left interest rates unchanged as widely expected on Wednesday, the central bank forecast another rate hike before the end of the year as well as keeping rates at elevated levels for longer than previously anticipated.

Traders may also have been reluctant to make significant bets ahead of the release of some key economic data next week that could impact the outlook for interest rates.

Next week will see the release of a report on personal income and spending that includes readings on inflation said to be preferred by the Fed.

Sector News

Most of the major sectors ended the day showing only modest moves contributing to the lackluster close by the broader markets.

Airline stocks showed a significant move to the downside, however, with the NYSE Arca Airline Index falling by 1.5 percent to its lowest closing level in six months.

Significant weakness also emerged among banking stocks, as reflected by the 1.3 percent loss posted by the KBW Bank Index. The index fell to a nearly three-month closing low.

Tobacco and commercial real estate stocks also saw some weakness on the day, while strength remained visible among computer hardware and software socks.

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 0.5 percent, while China’s Shanghai Composite Index jumped by 1.6 percent.

The major European markets also finished the day mixed. While the U.K.’s FTSE 100 Index inched up by 0.1 percent, the German DAX Index edged down by 0.1 percent and the French CAC 40 Index fell by 0.4 percent.

In the bond market, treasuries regained ground following the sell-off seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.2 basis points to 4.438 percent.

Looking Ahead

The Fed’s preferred inflation readings are likely to be in focus next week, while traders are also likely to keep an eye on reports on new home sales, durable goods orders and consumer confidence.

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