Stocks Give Back Ground Amid Steep Drop In Oil Prices - U.S. Commentary

(RTTNews) - Following the rally seen over the course of the two previous sessions, stocks gave back some ground during trading on Friday. With the drop on the day, the tech-heavy Nasdaq pulled back off yesterday's record closing high.

The major averages ended the day firmly in negative territory but off their lows for the session. The Dow slid 131.01 points or 0.7 percent to 18,261.45, the Nasdaq fell 33.78 points or 0.6 percent to 5,305.75 and the S&P 500 dropped 12.49 points or 0.6 percent to 2,164.69.

Despite the pullback on the day, the major averages still closed higher for the week. The Dow advanced by 0.8 percent, while the Nasdaq and the S&P 500 both jumped by 1.2 percent.

Profit taking contributed to some of the weakness on Wall Street, as traders cashed in on the recent move to the upside.

The strength seen during trading on Thursday extended the rally seen on Wednesday amid a continued positive reaction to the Federal Reserve's monetary policy decision.

A sharp pullback by the price of crude oil also weighed on the markets, with crude for November delivery plunging $1.84 to $44.48 a barrel.

The price of crude oil came under pressure after Bloomberg reported Saudi Arabia does not expect an output agreement to stabilize the market in talks in Algiers next week.

Nonetheless, overall trading activity remained somewhat subdued amid a relatively quiet day in terms of U.S. economic data.

Markit released a report showing that its index of manufacturing activity edged down to 51.4 in September from 52.1 in August, although the data did not attract much attention.

Among individual stocks, shares of Houghton Mifflin Harcourt (HMHC) came under pressure after the publishing company announced the resignation of its President and Chief Executive Officer Linda Zecher.

Finish Line (FINL) also posted a notable loss even though the athletic footwear and apparel retailer reported second quarter earnings that met analyst estimates on better than expected sales.

On the other hand, shares of Twitter (TWTR) moved sharply higher after reports said the social media giant has moved closer to being sold.

Sector News

Gold stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 2.8 percent.

The weakness among gold stocks came amid a decrease by the price of the precious metal, with gold for December delivery sliding $3 to $1,341.70 an ounce.

Significant weakness was also visible among energy stocks, which came under pressure amid the steep drop by the price of crude oil.

Reflecting the weakness in the energy sector, the NYSE Arca Oil & Gas Index slumped by 1.6 percent, while the NYSE Arca Natural Gas Index and the Philadelphia Oil Service Index plummeted by 2.6 percent and 2.8 percent, respectively.

Semiconductor stocks also saw notable weakness on the day, while most of the other major sectors showed more modest moves.

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 fell by 0.3 percent, while Australia's All Ordinaries Index advanced by 1 percent.

Meanwhile, the major European markets gave back ground following recent strength. While the U.K.'s FTSE 100 Index closed just below the unchanged line, the German DAX Index and the French CAC 40 Index dropped by 0.4 percent and 0.5 percent, respectively.

In the bond market, treasuries turned in a relatively lackluster performance but managed to close modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.7 basis points to 1.615 percent.

Looking Ahead

With the Fed decision now in the rearview mirror, the latest batch of U.S. economic data is likely to be in the spotlight next week.

Traders are likely to keep a close eye on reports on new home sales, durable goods orders, consumer confidence, and personal income and spending.

A number of Fed officials are also due to speak next week, including Cleveland's Loretta Mester and Kansas City's Esther George, who both voted to raise rates at the last meeting.