U.S. stocks closed near session lows on Friday

Investor sentiment hit by a renewed slide in crude-oil prices

U.S. stocks closed near session lows on Friday, 23 September 2016 with investor sentiment hit by a renewed slide in crude-oil prices. Reports that major oil producers are not likely to reach an agreement to freeze production at a meeting this weekend resulted in the largest one-day loss for oil futures since mid-July. The main indexes posted a second straight weekly gain, however, thanks to a Fed-induced rally earlier this week. Earlier, the catalyst for the downturn was a weaker than expected reading of manufacturing activity, which pointed to a slowdown in growth this month.

 

The Dow Jones Industrial Average declined 131.01 points, or 0.7%, to 18,261.45 with all but three of the 30 blue-chip components finishing in negative territory. The S&P 500 fell 12.49 points, or 0.6%, to 2,164.69, with a 1.3% tumble in the energy sector. The Nasdaq Composite Index dropped 33.78 points, or 0.6%, to 5,305.75, backing off two straight days of record closes.\

Markets rallied earlier in the week as traders cheered the Federal Reserve's latest policy announcement, sending the Nasdaq Composite to consecutive record closes. The Fed on Wednesday stood pat on interest rates, but also indicated confidence in the U.S. economy and signaled a rate rise could come by year's end. Equity indices stumbled at the start of the session as investors looked to lock in some profits in the wake of the recent Fed-induced rally.

Reports on Friday that Saudi Arabia views a planned confab of members of the Organization of the Petroleum Exporting Countries and other top oil-producers set for next week in Algeria, as merely a consultation and doesn't expect a concrete pact to be reached, deflated crude futures prices, which had benefited from the prospects of an agreement.

Apple shares, off 1.6%, were also contributing to negative sentiment following reports that Japanese antitrust regulators were considering taking action against the Cupertino, Calif.-based company. The blue-chip index posted a 0.8% gain over the week.

Economic data for the week showed that a preliminary reading of U.S. manufacturing purchasing managers index fell to 51.4 in September compared with 52 in August and its lowest reading since June. A reading above 50 indicates an expansion in activity.

Among stocks under focus, shares in Yahoo fell 3.1% after the ailing internet pioneer disclosed a massive security breach affecting at least 500 million users. Facebook dropped 1.6% following a report that big ad buyers are upset that the tech giant vastly overestimated average viewing time for video ads on its platform. Bucking the general trend, shares of Twitter soared amid reports that acquisition talks for the microblogging company had intensified.

The broader market extended its loss near midday as the commodity complex came under pressure. Commodities were in focus as participants pored over proposed rule changes designed to limit the physical commodity activities of financial holding companies. Specifically, the Federal Reserve proposed strengthening existing capital requirements and quantitative limits on such companies.

Bullion prices settled with a loss on Friday, 24 September 2016, but booked the strongest weekly advance in about two months as the precious metal scored a boost from central-bank moves, including the Federal Reserve's decision to hold off on hiking interest rates in September.

December gold slipped $3, or 0.2%, to settle at $1,341.70 an ounce, cutting its weekly advance down to 2.4%. That was still the biggest weekly gain since the week ended 29 July 2016. Silver for December delivery lost 28.9 cents, or 1.4%, to $19.81 an ounce, with a weekly gain of 5%.

November West Texas Intermediate crude dropped $1.84, or about 4%, to settle at $44.48 a barrel on the New York Mercantile Exchange. That was the sharpest one-day dollar and percentage loss since mid July. WTI oil had traded higher for four days in a row and managed to book a weekly gain of 2%. Global benchmark Brent crude for November delivery lost $1.76, or 3.7%, to $45.89 a barrel, with the contract holding on to a weekly gain of about 0.3%.

Treasuries ended on a mostly higher note with the short end of the curve outperforming. The yield on the 2-yr note finished lower by two basis points (0.76%) while the yield on the 10-yr note finished flat (1.62%).

Today's participation was below the recent average as fewer than 804 million shares changed hands on the NYSE floor.

Monday's economic data will be limited to the New Home Sales Report for August (consensus 585k), which will be released at 10:00 ET.

Powered by Capital Market - Live News