Stocks Close Modestly Lower Following Lackluster Session - U.S. Commentary

(RTTNews) - Stocks turned in a relatively lackluster performance throughout the trading session on Friday before closing slightly in the red. The modest drop on the day came on the heels of the nearly flat close seen in the previous session.

The major averages ended the session in negative territory but off their worst levels of the day. The Dow dipped 28.97 points or 0.2 percent to 17,897.46, the Nasdaq slipped 7.67 points or 0.2 percent to 4,938.22 and the S&P 500 edged down 2.05 points or 0.1 percent to 2,080.73.

Despite the drop on the day, the major averages all moved higher for the week. The S&P 500 jumped by 1.6 percent, while the Dow and the Nasdaq both surged up by 1.8 percent.

The lower close on Wall Street was partly due to a steep drop by the price of crude oil, which pulled back further off its recent highs.

Crude oil for May delivery tumbled $1.14 to $40.36 a barrel a barrel after sliding $0.26 to $41.50 a barrel on Thursday.

With the decrease, the price of crude oil moved lower for the third straight day after ending Tuesday's trading at its highest closing level since late November.

The continued decrease by the price of crude oil reflected trepidation ahead of this weekend's meeting of major oil producers in Doha.

Traders were also digesting the latest batch of U.S. economic data, including a report from the Federal Reserve showing a much bigger than expected drop in industrial production in March.

The Fed said industrial production fell by 0.6 percent in March, matching the downwardly revised drop reported for February. Economists had expected production to edge down by 0.1 percent.

The bigger than expected decrease was primarily due to steep drops in mining and utilities output, although manufacturing output also fell 0.3 percent.

A separate report from the University of Michigan showed an unexpected deterioration in consumer sentiment in the month of April.

The report said the preliminary reading on the consumer sentiment index for April came in at 89.7 compared to the final March reading of 91.0. The index has been expected to inch up to 92.0.

Traders largely shrugged off a report from the New York Fed showing a faster than expected expansion in regional manufacturing activity in April.

Sector News

Despite the lack of direction shown by the broader markets, substantial weakness was visible among computer hardware stocks. The NYSE Arca Computer Hardware Index plunged by 3.7 percent to its lowest closing level in well over a month.

Super Micro Computer (SMCI) helped to lead the hardware sector lower, plummeting by 19.6 percent after warning of weaker than previously expected third quarter results.

Networking stocks also showed a significant move to the downside on the day, dragging the NYSE Arca Networking Index down by 2.1 percent. Mitel (MITL) posted a steep loss after agreeing to acquire Polycom (PLCM) for $2 billion.

Considerable weakness was also visible among energy stocks, which moved lower along with the price of crude oil. The NYSE Arca Oil & Gas Index slumped by 1.7 percent.

On the other hand, gold stocks showed a strong move to the upside, driving the NYSE Arca Gold Bugs Index up by 2.5 percent. The strength in the sector came as gold for June delivery climbed $8.10 to $1,234.60 an ounce.

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 fell by 0.4 percent, while Australia's All Ordinaries Index advanced by 0.7 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index dipped by 0.3 percent, the French CAC 40 Index and the German DAX Index both dropped by 0.4 percent.

In the bond market, treasuries moved higher on the heels of the disappointing U.S. economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 1.752 percent.

Looking Ahead

The outcome of the Doha meeting is likely to impact trading next week along with reports on housing starts, existing home sales, and homebuilder confidence.

Earnings season will also pick up steam next week, with American Express (AXP), Coca-Cola (KO), IBM (IBM), Intel (INTC), Johnson & Johnson (JNJ), McDonald's (MCD), Microsoft (MSFT), and Morgan Stanley (MS) among the slew of companies releasing results.