Positie economic reports have virtually no impact on stock prices on Friday
The U.S. stock market closed lower on Friday, 12 September 2014 as rising Treasury yields and the prospect of next week's Fed rate meeting made investors cautious. Equity indices extended this week's losses with a broad-based retreat. The S&P 500 retreated from record high levels throughout the week amid speculation that the Federal Reserve may signal the arrival of interest-rate increases sooner than expected. A solid rise in monthly retail sales and stronger-than-expected consumer sentiment data had virtually no impact on stock prices on Friday. The main benchmarks recorded their first weekly loss in six weeks, as investors continued to consolidate strong gains last month.
The Dow Industrials dropped 61.49 points, or 0.4%, to 16,987.51. The Nasdaq Composite fell 24 points, or 0.5%, to 4,567.60. The S&P 500 closed 12 points, or 0.6%, lower at 1,985.55. Utilities and energy-sector stocks led losses.
The energy sector tumbled out of the gate, thus dragging the broader market down with it. Once again, dollar strength and crude oil weakness contributed to sector's underperformance, but the growth-sensitive group did not see any respite in the afternoon when the Dollar Index edged lower.
The other twotelecom services and utilities were hampered by higher interest rates. Staying on that point, the 10-yr note retreated throughout the session to register a half-point loss. The benchmark yield rose six basis points to 2.61% after starting the week at 2.46%.
Yahoo! shares rallied 3.9% and gained more than 8% over the past week, as the prospect of a big cash windfall after the IPO of Alibaba made the stock attractive. Yahoo holds roughly a 23% stake in Alibaba and intends to sell those during the IPO.
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As per latest data at Wall Street, economic data included Retail Sales, Import/Export Prices, Michigan Sentiment Survey, and Business Inventories.
Sales at U.S. retailers rose in August by 0.6%, matching expectations and representing the biggest increase since April. Sales were revised higher for June and July. After missing expectations last month, sales rebounded in August and upward revisions were reported for the prior month (to 0.3% from 0.0%); concerns that consumption could weigh down GDP growth were somewhat alleviated. Excluding motor vehicles, retail sales increased a respectable 0.3% for a second consecutive month and met the consensus expectations. Export prices, excluding agriculture, decreased 0.3% in August after increasing 0.3% in the prior reading. Excluding oil, import prices ticked up 0.1%, which followed last month's unchanged reading.
The University of Michigan Consumer Sentiment Index increased to 84.6 in the preliminary September reading from 82.5 in August, while the consensus expected the index to increase to 83.5. That was the highest reading in the Sentiment Index since July 2013. The Present Conditions Index deteriorated in September, dropping from 99.8 in August to 98.5. The Expectations Index rose to 75.6 in September from 71.3 in August Business inventories increased an in-line 0.4% in July after increasing by the same amount in June.
Inventories for manufacturers (0.1%) and merchant wholesalers (0.1%) were known prior to the release. The only bit of new information was that retailer inventories increased 1.0% in July after increasing 0.7% in June.
Also of note, the U.S. Treasury has announced a new set of sanctions on Russian banks, energy, and defense companies. The move followed a similar announcement from the European Union.
Today's session saw relatively strong participation with more than 675 million shares changing hands at the NYSE floor.
A stronger dollar has also kept pressure on oil and other commodities priced in the currency. A stronger greenback is usually a negative for raw materials as it makes the commodities more expensive for users of other currencies. The dollar has been boosted in part by expectations the Federal Reserve is moving closer to the start of a rate-hike cycle.
Bullion metals ended the weeek on a mixed note on Friday, 12 September 2014 at Comex. Gold futures fell for a fifth session on Friday. Retail-sales data matched expectations, raising confidence in the U.S. economic outlook and dampening haven demand. This week, gold has been undercut by a dollar that's finding support in expectations the Federal Reserve will take a more hawkish tone on interest rates.
Gold futures for December delivery shed $7.50, or 0.6% to settle at $1,231.50 an ounce. Gold managed to close out the week 2.8% lower. December silver edged up a penny to $18.55 an ounce but still dropped 2.8% for the week.
Crude Oil futures fell on Friday, 12 September 2014 notching a second consecutive weekly loss thanks to a strengthening dollar and key reports that forecast weaker global demand for crude and plentiful supplies. Oil futures were little budged by data that showed U.S. retail sales rose by 0.6% in August and increased 0.3%, excluding autos.
Light, sweet crude futures for October delivery fell 56 cents, or 0.6%, to settle at $92.27 a barrel on the New York Mercantile Exchange. It declined 1% on the week, down for 10 of the past 12 weeks.
Demand expectations in Europe were further undercut when the European Union extended its sanctions on Russia and rebels in eastern Ukraine on Friday.
The International Energy Agency on Thursday cut its forecast for global oil demand growth to 900,000 barrels a day, following a similar move by OPEC earlier in the week and a recent forecast by the U.S. Energy Information Administration.
On Monday, the Empire Manufacturing Index for September will be released at 8:30 ET, while August Industrial Production and Capacity Utilization will be reported at 9:15 ET.
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