Indices suffer more than 2% weekly losses
US stocks fluttered on Friday, 16 August 2013 with investors on uncertain footing as longer-term Treasury yields rose to two-year highs. Stocks were trying to bounce back from Thursday's drubbing while at the same time contending with a further rise in the 10-yr note yield, which hit 2.86% at its highest level of the day.
The Dow slid 30.72 points, or 0.2%, to finish at 15,081.47, while the S&P 500 index fell 5.49 points, or 0.3%, to close at 1,655.83. The Nasdaq Composite shed 3.34 points, or 0.1%, to end at 3,602.78.
All three main stock indexes lost ground for the second week in a row. For the week, the Dow lost 344 points, or 2.2%, suffering its biggest weekly percentage drop and point loss of 2013. It was the blue-chip index's worst weekly percentage slide since May 2012, and its largest point decline since June 2012. The S&P 500 slumped nearly 36 points, or 2.10%, for the week, suffering its biggest weekly point drop of the year, but not its biggest percentage decline. The tech-heavy Nasdaq was down just 1.6% for the week, as Apple's 10.5% weekly gain provided a boost.
It wasn't all about interest rates, though. Increasing worries about the escalating violence in Egypt's political battle, uneven economic data, and disappointing earnings outlooks provided by Macy's, Cisco, Wal-Mart and Nordstrom all factored into the broad-based weakness.
The basis for the jump in long-term rates was attributed to concerns that the Federal Reserve is going to announce at its September FOMC meeting a decision to taper its asset purchases. Those concerns were driven by stronger-than-expected reports for retail sales and weekly initial claims, the latter of which fell to its lowest level since October 2007.
In terms of U.S. data, investors on Friday took in a worse-than-expected report on housing starts, plus a reading on productivity that beat forecasts. There was batch of economic data today that included the Housing Starts and Building Permits report for July, the Productivity report for the second quarter, and the University of Michigan Consumer Sentiment report for August. True to recent form, the economic data was uneven.
Housing starts and building permits were basically in-line with expectations, rising 5.9% and 2.7%, respectively, to an annualized rate of 896,000 and 943,000, yet those increases were driven entirely by multi-family units. Starts and permits for single-family homes were down 2.2% and 1.9% from June.
Second quarter productivity increased 0.9% and unit labor costs rose 1.4%. Both numbers were better than expected and both were promptly ignored by the market given the dated nature of the report.
The University of Michigan Consumer Sentiment report, however, captured some of the market's attention with a disappointing headline print of 80.0. That was down from 85.1 in July. Still, the pullback in the indexes for current conditions and expectations were downers in terms of the report's overall messaging.
Among major stocks under focus, Nordstrom shares fell 4.9% a day after the high-end retailer reported lower-than-expected sales and cut its full-year forecast. Aspen Technology shares jumped 7.9% after the maker of software for process manufacturing posted higher-than-expected sales and earnings for the fiscal fourth quarter. Dell posted adjusted earnings of 25 cents per share a penny higher than analysts had predicted. Shares of the personal-computer maker gained 0.8%.
Stocks like Boeing, Apple, American Express and United Continental offered a measure of support, but clear-cut sector strength was lacking for the most part today.
The technology sector was the relative strength leader during the week, falling only 0.3%. Shares of AAPL surged 10.7% on the news that activist investor Carl Icahn reported a large position in the company and recommended to Apple CEO Tim Cook that the company do a large share buyback.
Bullion prices ended higher on Friday, 16 August 2013. Futures for gold and silver advanced on Friday, with silver a standout in the metals complex as prices for the white metal scored their best weekly performance in nearly five years.
Gold for December delivery rose $10.10, or 0.7%, to settle at $1,371 an ounce on the Comex division of the New York Mercantile Exchange. Gold futures saw a weekly rise of 4.5%. Gold futures were on track for a loss of around 19% for the year, which would mark their first yearly decline since 2000.
Silver prices, meanwhile, leapt 14% for the week the biggest weekly percentage increase for a most-active contract. Silver for September delivery on Friday tacked on 39 cents, or 1.7%, to settle at $23.32 an ounce after Thursday's surge of more than 5%.
Crude Oil futures ended a volatile session Friday, 16 August 2013 at Nymex with a minor gain, as traders assessed the risk to global oil supplies tied to violence in Egypt. Prices extended their climb to a sixth straight session, though weaker-than-expected data on U.S. consumer sentiment dented the outlook for energy demand.
Crude oil for September delivery rose 13 cents, or 0.1%, to settle at $107.46 a barrel on the New York Mercantile Exchange. It traded at highs above $108 and at lows under $107. It ended up nearly 5% for the week.
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