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U.S. stocks closed lower on Friday

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Capital Market

The largest blue-chip decliners were Caterpillar and Goldman Sachs

U.S. stocks closed lower on Friday, 16 December 2016 with the Dow industrials swinging to a loss, following reports that a Chinese warship seized an underwater U.S. Navy drone in international waters off the coast of the Philippines. Equities spent the Friday affair inside narrow ranges amid a mixed showing from individual sectors. Most countercyclical groups displayed strength from the start, but their gains were not sufficient to offset losses among cyclical sectors. Even as the Dow was curtailed from its advance to the psychologically important 20,000 level, the blue-chip average still nabbed its longest weekly winning streak in more than a year, rising six weeks in a row.

 

The Dow Jones Industrial Average which had been up by as many as 71 points earlier, swung to a loss after the Department of Defense announced a Chinese naval vessel took an underwater Navy drone that was collecting water measurements like temperature and salinity. The average finished down 8.83 points, or less than 0.1%, at 19,843.41. The Nasdaq Composite fell 19.69 points, or 0.4%, to finish at 5,437.16. The S&P 500 which had been struggling earlier, declined 3.96 points, or 0.2%, to close at 2,258.07.

All but five of the S&P 500's 11 primary sectors rose on the day. The biggest gainers were utilities and real estate, which both closed up 1.2% despite a weak reading on housing starts. The largest blue-chip decliners were Caterpillar and Goldman Sachs.

The news weighed on sentiment, keeping the market near its low into the afternoon. Treasuries climbed off their lows in reaction to the news, but afternoon backtracking left the 10-yr note in the middle of its range. The benchmark yield slipped one basis point to 2.59%.

The Fed news has fueled a rally in the ICE Dollar Index which shot to a 14-year high on Thursday. The index was last down 0.2%.

Economic data at Wall Street was limited to Housing Starts and Building Permits. November housing starts declined 18.7% to a seasonally adjusted annual rate of 1.090 million units (consensus 1.225 mln). Building permits declined 4.7% to a seasonally adjusted annual rate of 1.201 million (consensus 1.236 million), although permits for single-family homes increased 0.5% to 778,000. The November report followed a big beat in October, thus market reaction was limited.

Crude oil prices settled higher on Friday, 16 December 2016 to tally a gain for the week, with traders encouraged by signs that major oil producers will adhere to the pledge to curb output but still concerned about potential production increases in the U.S. and Libya. Prices had lower earlier amid news that Libya has restarted operations at two key oil fields. The market has seen some signs of planned compliance with the output pact among members of the Organization of the Petroleum Exporting Countries and other oil producers. On the New York Mercantile Exchange, January West Texas Intermediate crude added $1, or 2%, to settle at $51.90 a barrel. For the week, prices rose roughly 0.8%.

Investor participation was well above average due to quadruple witching. More than two billion shares changed hands at the NYSE floor.

Investors will not receive any economic data on Monday.

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First Published: Dec 19 2016 | 12:21 PM IST

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