Disappointing GDP Data Leads To Weakness On Wall Street - U.S. Commentary

(RTTNews) - Stocks saw some volatility during trading on Friday but largely maintained a negative bias before ending the session firmly in the red. The losses on the day offset the strong upward move that was seen in the previous session.

The major averages saw further downside going into the close, ending the session near their worst levels of the day. The Dow tumbled 251.90 points or 1.5 percent to 17,164.95, the Nasdaq slumped 48.17 points or 1 percent to 4,635.24, and the S&P dove 26.26 points or 1.3 percent to 1,994.99.

With the losses on the day, the major averages all moved sharply lower for the week. The Dow plummeted by 2.9 percent, while the Nasdaq and the S&P 500 plunged by 2.6 percent and 2.8 percent, respectively.

The weakness on Wall Street reflected a negative reaction to a Commerce Department report showing that U.S. economic growth slowed more than expected in the last three months of 2014.

The report said U.S. gross domestic product climbed 2.6 percent in the fourth quarter following the 5.0 percent jump seen in the third quarter. Economists had expected GDP to increase by about 3.2 percent.

Trade was a big drag on fourth quarter GDP, adding to recent concerns about the impact of economic weakness overseas.

In a private luncheon with Senate Democrats on Thursday, Federal Reserve Chair Janet Yellen said the U.S. economy is strong but expressed some concerns about the situation in Europe.

The Fed's monetary policy statement indicated that the central bank will include international developments as part of its assessment of when to raise interest rates.

Meanwhile, traders largely shrugged off separate reports showing consumer sentiment at an eleven-year high and an acceleration in the pace of growth in Chicago business activity.

Despite the pullback by the broader markets, shares of Amazon (AMZN) have moved sharply higher on the day, with the online retail giant surging up by 13.7 percent after reporting fourth quarter earnings that came in well above analyst estimates.

Shares of Google (GOOG) also bucked the downtrend even though the tech giant reported weaker than expected fourth quarter earnings.

Sector News

Airline stocks turned in some of the market's worst performances on the day, dragging the NYSE Arca Airline Index tumbling by 5.7 percent. With the drop, the index pulled back further off the twelve-year highs it set on Monday.

Hawaiian Airlines parent Hawaiian Holdings (HA) led the sector lower, plunging by 27 percent after forecasting a drop by a key revenue figure in the first quarter.

Considerable weakness was also visible among electronic storage stocks, as reflected by the 2.8 percent loss posted by the NYSE Arca Disk Drive Index. The drop extended a recent downtrend by the index, which fell to a three-month closing low.

Software stocks also extended a recent sell-off on the day, resulting in a 2.8 percent drop by the Dow Jones Software Index. The index also ended the session at its lowest closing level in three months.

Utilities, transportation, semiconductor, and real estate stocks also saw significant weakness, while gold and energy stocks bucked the downtrend amid a jump in commodities prices.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index rose by 0.4 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets all came under pressure on the day. While the U.K.'s FTSE 100 Index slumped by 0.9 percent, the French CAC 40 Index and the German DAX Index dropped by 0.6 percent and 0.4 percent, respectively.

In the bond market, treasuries moved sharply higher on the heels of the disappointing GDP data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.6 basis points to 1.675 percent.

Looking Ahead

Economic data may continue to attract attention next week, with traders likely to keep a particularly close eye on the monthly jobs report due next Friday.

Ahead of the jobs report, trading could also be impacted by the release of reports on personal income and spending, manufacturing and service sector activity, and private sector employment.

On the earnings front, Exxon Mobil (XOM), Disney (DIS), UPS (UPS), General Motors (GM), Merck (MRK) and Twitter (TWTR) are among the companies due to release their quarterly results next week.