Dow, S&P 500 See Further Downside But Nasdaq Regains Ground

After moving sharply lower over the two previous sessions, the major U.S. stock indexes turned in a mixed performance during trading on Friday.

While the Dow and the S&P 500 extended the recent downward move, the tech-heavy Nasdaq managed to regain some ground.

The Nasdaq pulled back well off its best levels of the day but still closed up 47.41 points or 0.4 percent at 12,643.01, bouncing off its lowest closing level in five months.

Meanwhile, the Dow tumbled 366.71 points or 1.1 percent to 32,417.59 and the S&P 500 fell 19.86 points or 0.5 percent to 4,117.37.

The Dow slumped to its lowest closing level in seven months, while the S&P 500 slid to a new five-month closing low.

Despite the mixed performance on the day, the major averages all moved sharply lower for the week. The Dow tumbled by 2.1 percent, while the S&P 500 and the Nasdaq plunged by 2.5 percent and 2.6 percent, respectively.

The rebound by the Nasdaq partly reflected a positive reaction to earnings news from Amazon (AMZN), with the online retail giant spiking by 6.8 percent after reporting better than expected third quarter results.

Semiconductor giant Intel (INTC) also soared by 9.3 percent after reporting third quarter results that exceeded analyst estimates and providing upbeat guidance.

Meanwhile, a steep drop by shares of Chevron (CVX) weighed on the Dow, as the energy giant plunged by 6.7 percent after reporting third quarter earnings that missed analyst estimates.

Traders were also digesting a Commerce Department report showing its reading on consumer prices rose by 0.4 percent in September, matching the increase in August. Economists had expected prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices increased by 0.3 percent in September after inching up by 0.1 percent in the previous month. The core price growth matched economist estimates.

The annual rate of consumer price growth was unchanged at 3.4 percent, while the annual rate of core consumer price growth slipped to 3.7 percent in September from 3.8 percent in August. Both year-over-year readings matched expectations.

“Despite the larger than expected monthly increase in core prices, the Fed is widely expected to keep the federal funds rate unchanged at the conclusion of their regularly scheduled meeting next Wednesday,” said Sam Millette, Senior Market Strategist for Commonwealth Financial Network.

Sector News

Pharmaceutical stocks showed a substantial move to the downside, dragging the NYSE Arca Pharmaceutical Index down by 3.2 percent to its lowest closing level in over three months.

U.S.-listed shares of Sanofi (SNY) plummeted after the French pharmaceutical company reported weaker than expected third quarter results and provided disappointing guidance.

Considerable weakness was also visible among biotechnology stocks, as reflected by the 2.6 percent slump by the NYSE Arca Biotechnology Index.

Banking stocks also came under pressure over the course of the session, with the KBW Bank Index tumbling by 2.3percent.

JPMorgan (JPM) helped to lead the sector lower after the financial giant revealed CEO Jamie Dimon and his family plan to sell 1 million shares of the company’s stock beginning next year.

Telecom, airline and utilities stocks also saw notable weakness, while retail stocks turned in a strong performance following the upbeat earnings news from Amazon.

Gold stocks also moved sharply higher amid an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index jumped by 1.3 percent, while Hong Kong’s Hang Seng Index surged by 2.1 percent.

Meanwhile, the major European markets moved to the downside on the day. While the French CAC 40 Index tumbled by 1.4 percent, the U.K.’s FTSE 100 Index slid by 0.9 percent and the German DAX Index fell by 0.3 percent.

In the bond market, treasuries turned in a lackluster performance before ending the roughly flat. The yield on the benchmark ten-year note, which moves opposite of its price, closed unchanged at 4.845 percent.

Looking Ahead

The Federal Reserve’s monetary policy decision is likely to be in the spotlight next week, although the monthly jobs report may also attract attention along with reports on manufacturing and service sector activity.

Traders are also likely to keep an eye on the latest earnings news, with a number of big-name companies due to report their quarterly results next week.

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