Stocks Close Modestly Lower After Seeing Early Strength - U.S. Commentary

(RTTNews) - Stocks moved modestly lower over the course of the trading session on Friday after failing to sustain an early move to the upside. Selling pressure remained relatively subdued, however, limiting the downside for the markets.

The major averages finished the day in negative territory but off their worst levels. The Dow slipped 8.83 points or less than a tenth of a percent to 19,843.41, the Nasdaq fell 19.69 points or 0.4 percent to 5,437.16 and the S&P 500 dipped 3.96 points or 0.2 percent to 2,258.07.

With the drop on the day, the major averages turned in a mixed performance for the week. While the Dow rose by 0.4 percent, the Nasdaq and the S&P 500 both edged down by 0.1 percent.

The downturn by stocks was partly attributed to geopolitical concerns following reports that a Chinese Navy warship seized an underwater drone belonging to a U.S. oceanographic vessel in the South China Sea.

However, traders seemed somewhat reluctant to make more significant moves, taking a break following the recent upward move shown by the markets

In U.S. economic news, the Commerce Department released a report showing a steep drop in new residential construction in the month of November.

The report said housing starts plummeted by 18.7 percent to an annual rate of 1.090 million in November from the revised October estimate of 1.340 million.

Economists had expected housing starts to dip to a rate of 1.230 million from the 1.323 million originally reported for the previous month.

Building permits, an indicator of future housing demand, also fell by 4.7 percent to a rate of 1.201 million in November from a revised 1.260 million in October.

The drop in building permits came as a surprise to economists, who had expected permits to rise to a rate of 1.240 million from the 1.229 million that had been reported for the previous month.

Sector News

Steel stocks showed a significant move to the downside on the day, dragging the NYSE Arca Steel Index down by 2.5 percent.

Gerdau (GGB), Cliffs Natural Resources (CLF) and Schnitzer Steel (SCHN) turned in some of the sector's worst performances.

Considerable weakness was also visible among airline stocks, as reflected by the 1.9 percent drop by the NYSE Arca Airline Index. The index turned lower after reaching a fifteen-year intraday high in early trading.

Trucking, brokerage, and railroad stocks also saw notable weakness on the day, while strength was visible among commercial real estate, utilities, and gold stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. Japan's Nikkei 225 Index climbed by 0.7 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets all moved higher on the day. While the U.K.'s FTSE 100 Index inched up by 0.2 percent, the French CAC 40 Index and the German DAX Index both rose by 0.3 percent.

In the bond market, treasuries saw considerable volatility before ending the session modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.7 basis points to 2.597 percent.

Looking Ahead

Next week's trading may be impacted by reaction to reports on new and existing home sales, durable goods orders, and consumer sentiment along with remarks by Fed Chair Janet Yellen.