Interest Rate, Economic Worries Contribute To Pullback On Wall Street


Stocks moved mostly lower over the course of the session on Friday, giving back ground following the tech-led rebound during trading on Thursday. The major averages all moved to the downside, with the Nasdaq leading the pullback.

The major averages all finished the day firmly in negative territory. The Nasdaq slumped 138.09 points or 1.0 percent to 13,492.52, the S&P 500 slid 33.56 points or 0.8 percent to 4,348.44 and the Dow fell 219.28 points or 0.7 percent to 33,727.43.

For the holiday-shortened week, the Dow tumbled by 1.7 percent, while the Nasdaq and the S&P 500 both dove by 1.4 percent.

Overseas weakness carried over onto Wall Street amid ongoing concerns about the outlook for interest rates and the global economy.

Rate hikes in England and other countries along with the Federal Reserve’s forecast for additional rate increases have reignited worries tighter monetary policy will tip the global economy into recession.

Overall trading activity remained somewhat subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

The economic calendar picks back up next week with the release of reports on durable goods orders, consumer confidence, new home sales and pending home sales.

The Commerce Department is also due to release its report on personal income and spending in the month of May, which includes a reading on inflation said to be preferred by the Fed.

The consumer price inflation data could significantly impact opinions regarding whether the Fed will follow through on its forecast rate hikes.

Sector News

Networking stocks showed a significant move to the downside on the day, resulting in a 2.1 percent slump by the NYSE Arca Networking Index.

Significant weakness was also visible among semiconductor stocks, as reflected by the 1.8 percent loss posted by the Philadelphia Semiconductor Index.

Interest-sensitive utilities stocks also saw considerable weakness, dragging the Dow Jones Utility Average down by 1.6 percent.

Natural gas, computer hardware and commercial real estate stocks also moved notably lower over the course of the session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index tumbled by 1.5 percent, while Hong Kong’s Hang Seng Index plunged by 1.7 percent.

The major European markets also moved to the downside on the day. While the German DAX Index slumped by 1.0 percent, the French CAC 40 Index slid by 0.6 percent and the U.K.’s FTSE 100 Index fell by 0.5 percent.

In the bond market, treasuries rebounded after coming under pressure in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.0 basis points to 3.739 percent.

Looking Ahead

Next week’s trading is likely to be driven by reaction to the latest U.S. economic data, as traders look for additional clues about the outlook for interest rates.

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