Major Averages Close Slightly Lower But Well Off Worst Levels - US Commentary

WASHINGTON (Alliance News) - After initially moving to the downside, stocks once again staged a ...

Alliance News 11 January, 2019 | 9:18PM
Email Form

WASHINGTON (Alliance News) - After initially moving to the downside, stocks once again staged a recovery attempt over the course of the trading session on Friday. The major averages climbed well off worst levels of the day session but still closed slightly lower.

While the Nasdaq fell 14.59 points or 0.2% to 6,971.48, the Dow and the S&P 500 both edged down by less than a tenth of a %. The Dow dipped 5.97 points to 23,995.95 and the S&P 500 slipped 0.38 points to 2,596.26.

Despite the modestly lower close on the day, the major averages moved significantly higher for the week. The Nasdaq surged up by 3.5%, while the Dow and the S&P 500 jumped by 2.4% and 2.5%, respectively.

The early weakness on Wall Street was partly due to profit taking, 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 also weighed on the markets.

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

Traders seemed worried about missing out on further upside if the markets rebounded 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%.

Sector News

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

Tobacco stocks showed a substantial move to the upside, however, with the NYSE Arca Tobacco Index surging up by 2.6%. With the jump, the index reached its best closing level in almost a month.

Strength also emerged among semiconductor stocks, while oil service stocks climbed off their worst levels but still closed notably lower.

The weakness among oil service stocks came as the price of crude oil for February delivery slid USD1 to USD51.59 a barrel after rising to a five-week high on Thursday.

Other Markets

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 moved to the downside on the day. While the French CAC 40 Index fell by 0.5%, the UK's FTSE 100 Index and the German DAX Index dropped by 0.4% and 0.3%, respectively.

In the bond market, treasuries regained ground after trending lower over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3 basis points to 2.701%.

Looking Ahead

Developments regarding the government shutdown may attract attention next week along with reports on producer prices, homebuilder confidence, and industrial production.

Copyright RTT News/dpa-AFX

Email Form
About Author Alliance News

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