Stocks Close In The Red But Well Off Worst Levels - U.S. Commentary

(RTTNews) - After showing a substantial move to the downside in morning trading on Friday, stocks staged a recovery attempt late in the session but still finished the day in the red. The losses on the day partly offset the rally that was seen in the previous session.

The major averages closed in negative territory but well off their worst levels of the day. The Dow slid 145.91 points or 0.8 percent to 17,749.31, the Nasdaq dipped 21.53 points or 0.4 percent to 4,871.76 and the S&P 500 fell 12.55 points or 0.6 percent to 2,053.40.

For the week, the Dow dropped by 0.6 percent, while the Nasdaq and the S&P 500 tumbled by 1.1 percent and 0.9 percent, respectively.

The early sell-off on Wall Street reflected several negative catalysts, including another surge by the value of the U.S. dollar, which rebounded after yesterday's pullback.

The dollar has jumped 1.4 percent against the euro to $1.0485, once again reaching its highest level versus the European currency in twelve years.

The dollar has recently benefited from expectations of higher interest rates, raising concerns about profits at American multinationals.

A continued decrease by the price of crude oil also weighed on the markets, with the price of oil pulling back toward its recent lows.

Crude oil for April delivery plunged $2.21 to $44.84 a barrel on the day after slumping $1.12 to $47.05 a barrel on Thursday.

Negative sentiment was also generated by a report from the University of Michigan showing an unexpected deterioration in consumer sentiment in the month of March.

The report showed that the consumer sentiment index tumbled to 91.2 in March from the final February reading of 95.4. Economists had expected the index to inch up to a reading of 96.0.

However, traders went bargain hunting late in the session, looking ahead to the Federal Reserve's monetary policy meeting next week.

While the Fed is not expected to announce an increase in interest rates, traders will be paying close attention to any changes to the accompanying statement.

Sector News

Reflecting the steep drop by the price of crude oil, oil service stocks showed a steep drop on the day. The Philadelphia Oil Service Index plummeted by 2.6 percent to its lowest closing level in over four years.

Rowan (RDC), Core Laboratories (CLB) and Tidewater (TDW) turned in some of the oil service sector's worst performances.

Steel stocks also moved sharply lower amid concerns about the impact of the stronger dollar. Reflecting the weakness in the sector, the NYSE Arca Steel Index plunged by 2.3 percent to a nearly six-year closing low.

Computer hardware, tobacco, and utilities also ended the day notably lower, while most of the other major sectors climbed well off their worst levels.

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 surged up by 1.4 percent, while Australia's All Ordinaries Index dropped by 0.5 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index fell by 0.3 percent, the French CAC 40 Index rose by 0.5 percent and the German DAX Index advanced by 0.9 percent.

In the bond market, treasuries showed a lack of direction throughout the session before closing modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.6 basis points to 2.112 percent.

Looking Ahead

The Fed is likely to be in the spotlight next week, with the central bank due to announce its monetary policy decision on Wednesday followed by a press conference by Fed Chair Janet Yellen.

With the focus on the Fed, traders may overlook reports on industrial production, homebuilder confidence, housing starts and regional manufacturing activity.