U.S. Stocks Close Mixed Following Late-Day Pullback

After moving sharply higher early in the session, stocks remained mostly positive throughout the trading day on Friday before coming under pressure going into the close. The major averages pulled back sharply in the final hour of trading, with the tech-heavy Nasdaq sliding into negative territory.

The major averages ended the session on opposite sides of the unchanged line. While the Nasdaq fell 42.32 points or 0.4 percent to 11,671.56, the Dow rose 112.11 points or 0.4 percent to 28,606.31 and the S&P 500 inched up 0.47 points or less than a tenth of a percent to 3,483.81.

Despite the mixed close on the day, the major averages all moved higher for the week. The Nasdaq climbed by 0.8 percent, while the Dow and the S&P 500 edged up by 0.1 percent and 0.2 percent, respectively.

The late-day pullback on Wall Street may have reflected lingering uncertainty about a new stimulus bill, with the slump also being attributed to the expiration of equity options.

The rally seen in early trading came as much better than expected retail sales data partly offset recent concerns the economic recovery may be stalling.

A report from the Commerce Department said retail sales spiked by 1.9 percent in September after rising by 0.6 percent in August. Economists had expected retail sales to climb by 0.7 percent.

Excluding a jump in sales by motor vehicles and parts dealers, retail sales still surged up by 1.5 percent in September after climbing by a downwardly revised 0.5 percent in August.

Ex-auto sales were expected to rise by 0.5 percent compared to the 0.7 percent increase originally reported for the previous month.

Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, jumped by 1.4 percent in September after dipping by 0.3 percent in August.

Michael Pearce, Senior U.S. Economist at Capital Economics, said the strong retail sales growth “suggests the economy was carrying more momentum into the fourth quarter than anticipated, defying fears that the expiry of enhanced unemployment benefits in the summer would harm the economy.”

Adding to the positive sentiment, the University of Michigan released a report showing a bigger than expected improvement in consumer sentiment in the month of October.

The preliminary report said the consumer sentiment index rose to 81.2 in October from the final September reading of 80.4. Economists had expected the index to inch up to 80.5.

Meanwhile, traders largely shrugged off a report from the Federal Reserve showing an unexpected decrease in industrial production in the month of September.

Buying interest was also generated after Pfizer (PFE) Chairman and CEO Albert Bourla said the drug giant will apply for emergency use of the Covid-19 vaccine it is developing with BioNTech (BNTX) soon after the safety milestone is achieved in the third week of November.

“All the data contained in our U.S. application would be reviewed not only by the FDA’s own scientists but also by an external panel of independent experts at a publicly held meeting convened by the agency,” Bourla said in an open letter.

The Dow benefited from an advance by shares of Boeing (BA), which moved notably higher after Europe’s top aviation regulator told Bloomberg he’s satisfied changes made to the aerospace giant’s 737 Max have made the aircraft safe to fly.

Sector News

Energy stocks showed a substantial move to the downside on the day even though the price of crude oil closed only modestly. Crude for November delivery edged down $0.08 to $40.88 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 4.8 percent, while the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index tumbled by 2.3 percent and 2 percent, respectively.

Significant weakness was also visible among gold stocks, as reflected by the 1.4 percent drop by the NYSE Arca Gold Bugs Index. The weakness in the sector came as gold for December delivery dipped $2.50 to $1,906.40 an ounce.

Transportation stocks also saw notable weakness on the day, while pharmaceutical, utilities and brokerage stocks showed strong moves to the upside.

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 0.4 percent, while Hong Kong’s Hang Seng Index advanced by 0.9 percent.

Meanwhile, the major European markets also showed strong moves to the upside on the day. While the French CAC 40 Index surged up by 2 percent, the German DAX Index and the U.K.’s FTSE 100 Index jumped by 1.6 percent and 1.5 percent, respectively.

In the bond market, treasuries closed modestly lower after showing a lack of direction earlier in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.3 basis points to 0.744 percent.

Looking Ahead

Earnings season kicks into high gear next week, with IBM (IBM), Procter & Gamble (PG), Netflix (NFLX), Verizon (VZ), Tesla (TSLA), AT&T (T), Coca-Cola (KO), Intel (INTC), and Honeywell (HON) just a few of the big-name companies due to report their quarterly results.

Traders are also likely to keep an eye on the latest developments in Washington as well as reports on homebuilder confidence, housing starts, and existing home sales.

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