U.S. Stocks Fluctuate Before Closing Mostly Lower

Following the pullback seen in the previous session, stocks fluctuated over the course of the trading day on Friday but largely maintained a negative bias. The-tech heavy Nasdaq saw particular volatility following the steep drop seen on Thursday.

The Dow and the S&P 500 closed firmly in the red, while the Nasdaq posted a much more modest loss. While the Nasdaq edged down 10.75 points or 0.1 percent to 15,169.68, the Dow tumbled 532.20 points or 1.5 percent to 35,365.44 and the S&P 500 slumped 48.03 points or 1 percent to 4,620.64.

The major averages all showed notable moves to the downside for the week. The Nasdaq plunged by 2.9 percent, while the Dow and the S&P 500 dove by 1.7 percent and 1.9 percent, respectively.

The volatility on Wall Street came on a “quadruple witching” day, with stock options, index options, stock futures and index futures all expiring.

A lack of major U.S. economic data may also have contributed to the choppy trading, as traders look ahead to next week’s reports on consumer confidence, personal income and spending, durable goods orders and new and existing home sales.

Traders also seem to be expressing conflicting reactions to the Federal Reserve’s monetary policy announcement on Wednesday.

The markets initially seemed relieved the Fed’s move to accelerate the reduction in its asset purchases to $30 billion per month was not as aggressive as some had feared.

The Fed’s forecast for three interest rates hikes next year also eliminated some uncertainty, although traders now seem to be grappling with the reality of sooner-than-expected rate hikes.

Concerns about the impact of the Omicron variant of the coronavirus also weighed on the markets along with worries about ongoing supply chain issues.

Sector News

Banking stocks showed a substantial move to the downside on the day, dragging the KBW Bank Index down by 2.8 percent. Early in the session, the index hit its lowest intraday level in almost three months.

Considerable weakness was also visible among oil stocks, as reflected by the 2.1 percent slump by the NYSE Arca Oil Index.

The sell-off by oil stocks came amid a step drop by the price of crude oil, with crude for January delivery tumbling $1.52 to $70.86 a barrel.

Pharmaceutical, housing and chemical stocks also saw significant weakness on the day, while notable strength was visible among biotechnology, airline and networking stocks.

In the biotech sector, Novavax (NVAX) spiked 11.5 percent after the World Health Organization gave emergency approval to the biotech company’s coronavirus vaccine.

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 tumbled by 1.8 percent, while South Korea’s Kospi rose by 0.4 percent.

Meanwhile, European stocks moved mostly lower on the day. The French CAC 40 Index slumped by 1.1 percent and the German DAX Index slid by 0.7 percent, although the U.K.’s FTSE 100 Index bucked the downtrend and inched up by 0.1 percent.

In the bond market, treasuries pulled back off their best levels of the day but remained in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2 basis points to 1.422 percent after hitting a low of 1.372 percent.

Looking Ahead

Trading activity may be somewhat subdued next week in the lead-up to Christmas, although traders are still likely to keep an eye on some key U.S. economic data.

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