Profit Taking Contributing To Pullback On Wall Street - US Commentary

WASHINGTON (Alliance News) - After closing higher for five consecutive sessions, stocks have ...

Alliance News 11 January, 2019 | 3:45PM
Email Form

WASHINGTON (Alliance News) - After closing higher for five consecutive sessions, stocks have moved back to the downside in morning trading on Friday. The major averages have slid firmly into negative territory after ending Thursday's trading at their best closing levels in almost a month.

Currently, the major averages remain in the red but off their lows of the session. The Dow is down 155.72 points or 0.7% at 23,846.20, the Nasdaq is down 37.15 points or 0.5% at 6,948.92 and the S&P 500 is down 15.32 points or 0.6% at 2,581.32.

Profit taking is contributing to the pullback on Wall Street, with traders cashing in on the gains seen over the five-session winning streak.

Concerns about the ongoing government shutdown and skepticism about a potential trade deal between the US and China are also weighing on the markets.

Selling pressure has remained somewhat subdued, however, with recent upward momentum helping to limit the downside for the markets.

Traders may be worries about missing out on further upside if the markets recover from the early pullback as they did in the previous session.

On the economic front, the Labor Department released a report showing a slight drop in consumer prices in the month of December.

The Labor Department said its consumer price index slipped by 0.1% in December after coming in unchanged in November. The slight drop in consumer prices matched economist estimates.

Energy prices showed another significant decrease during the month, plunging by 3.5% in December following a 2.2% slump in the previous month.

A steep drop in gasoline prices led the way lower, with gas prices plummeting by 7.5% in December after tumbling by 4.2% in November.

On the other hand, the report said food prices climbed by 0.4% in December, the largest increase since May of 2014. Prices for fruits and vegetables surged higher.

Excluding food and energy prices, the core consumer price index rose by 0.2% in December, matching the increases seen in the two previous months as well as expectations.

Higher prices for shelter, recreation, medical care, and household furnishings and operations more than offset lower prices for airline fares, used cars and trucks, and motor vehicle insurance.

The report said the annual rate of consume price growth slowed to 1.9% in December from 2.2% in November, while the annual rate of core consumer price growth was unchanged at 2.2%.

Oil service stocks have shown a substantial move to the downside in morning trading, pulling back along with the price of crude oil. After rising to a five-week high on Thursday, crude for February delivery is sliding USD0.88 to USD51.71 a barrel.

The Philadelphia Oil Service Index is tumbling by 2.3% after ending the previous session at its best closing level in a month.

Steel, chemical, and computer hardware stocks are also seeing some weakness on the day, while considerable strength has emerged among tobacco stocks.

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%, while Hong Kong's Hang Seng Index climbed by 0.6%.

Meanwhile, the major European markets have moved to the downside on the day. While the French CAC 40 Index is down by 0.5%, the UK's FTSE 100 Index and the German DAX Index are both down by 0.4%.

In the bond market, treasuries have moved lower after ending the previous session roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.1 basis points at 2.690%.

Copyright RTT News/dpa-AFX

Email Form
About Author Alliance News

Alliance News provides Morningstar with continuously updating coverage of news affecting listed companies.