Market Wrap for Friday, August 16: Pullback In Equities Continues To Close Week
The U.S. stock market continued to pullback on Friday after recording large losses on Thursday. Over the last 5 trading sessions, the S&P 500 is now down more than 2 percent. Investor anxiety over the possibility of the Federal Reserve tapering its quantitative easing program in September has been the primary catalyst behind the sell-off. Losses were contained during Friday's session, with the Dow closing down around 31 points after losing more than 200 points on Thursday.
On the economic front, a disappointing August reading for the University of Michigan's Consumer Sentiment Index weighed on risk appetite on the day. In other markets, the U.S. Dollar rose slightly while long-term Treasury prices recorded moderate losses. Both gold and crude oil closed Friday's session with gains despite weakness in equities.
The Dow Jones Industrial Average fell 31 points, or 0.20 percent, to 15,081.
The S&P 500 lost around 5 points, or 0.33 percent, to 1,656.
The Nasdaq shed a little better than 3 points, or 0.09 percent, to finish at 3,603.
Housing starts rose in July by 5.9 percent to 896,000 compared to 846,000 in June. This was very slightly ahead of consensus estimates calling for an increase in housing starts for the month of 895,000.
Building permits for July climbed to 943,000 versus 918,000 in June. This was above the consensus, which expected permits would rise to 934,000 for the month.
Unit Labor Costs
After registering declines of 1.7 percent in each of the last two quarters, nonfarm labor productivity rose 0.9 percent in the second-quarter of 2013. The consensus estimate called for no change in labor productivity for Q2.
University of Michigan Consumer Sentiment
Consumer sentiment fell considerably more than expected for August. The University of Michigan Consumer Sentiment Index declined to 80.0 in the preliminary August reading. This compares to a reading of 85.1 in July. The consensus had expected no change in the index for the month.
Related: A look ahead to next week: FOMC, housing market in focus.
Crude oil futures traded up again on Friday. Late in the afternoon, NYMEX crude futures were higher by 0.12 percent to $107.46. Brent crude contracts had risen 0.76 percent to $110.43. Natural gas fell a little less than 1.50 percent on the session to $3.37.
A recent rally in precious metals prices continued on Friday. COMEX gold futures climbed 1.12 percent to $1,376.10 while silver contracts were last up 1.57 percent to $23.30. Copper added 0.84 percent on the session to $3.3685.
The grains complex was mostly lower to end the week. Near the close, corn contracts were down 1.85 percent and wheat had lost 0.92 percent. Movers in soft commodities included sugar and cotton. Sugar futures fell 1.45 percent while cotton was trading up 1.67 percent.
Long-term Treasury prices were lower on Friday afternoon. Near the close of equities, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE: TLT) was down 0.39 percent to $103.32.
Treasury yields were as follows in afternoon trade on Friday: The 2-Year Note was yielding 0.34 percent and the 5-Year Note yield was sitting at 1.58 percent. The 10-Year Note and 30-Year Bond were yielding 2.83 percent and 3.86 percent, respectively.
Heading into the closing bell, the U.S. Dollar was slightly higher. At last check, the PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP), which tracks the greenback versus a basket of foreign currencies, was up 0.14 percent to $21.97.
The closely watched EUR/USD pair was last down 0.08 percent to $1.3336. Other movers included the USD/JPY, which rose 0.20 percent and the AUD/USD, which added 0.66 percent on the day.
Volatility and Volume
The CBOE Volatility Index (VIX) fell on Friday despite a lower stock market. Late in the day, the widely watched barometer of volatility expectations was down 2.38 percent to 14.38.
Volume was considerably heavier than it has been in recent weeks, but remained below the 3-month average. On the session, around 121 million SPDR S&P 500 ETF (NSYE:SPY) shares traded hands compared to a 3-month daily average above 132 million.
Qihoo 360 Technology (NASDAQ: QIHU) rose around 11 percent to end the trading week. The move came in the wake of an 11 percent decline in the stock during the two previous trading sessions amid general weakness in Chinese tech names. Company president Qi Xiangdong stated that Qihoo's So.com search engine now has 20 percent market share in China, which helped boost the stock.
Aspen Technology (NASDAQ: AZPN) jumped around 8 percent on Friday after the company's fiscal fourth-quarter earnings results.
Trulia (NYSE: TRLA) added around 5 percent on the session after analysts at Goldman Sachs reiterated their Buy rating on the stock.
National Technical Systems (NASDAQ: NTSC) rose 38 percent on the day after the company agreed to be acquired by Aurora Capital Group for around $267 million in cash.
Shares of Pain Therapeutics (NASDAQ: PTIE) jumped around 36 percent in intra-day trading after the government reported that Pfizer (NYSE: PFE) was launching a new study of the painkiller, Remoxy, which was developed by Pain Therapeutics and Durect Corp. (NASDAQ: DRRX). Previously, Pfizer had said it was unsure if it would continue developing the drug. Durrect shares added around 17 percent on the news.
Sophiris Bio (NASDAQ: SPHS) fell 17 percent in its debut on the Nasdaq Stock Market. Prior to trading, the company had reduced the price of its IPO and boosted the number of shares being sold.
MannKind (NASDAQ: MNKD) slumped again on Friday. The stock soared on Wednesday after positive data was released from a late-stage trial of its diabetes treatment Afrezza, but the shares have come under pressure over the last two trading sessions as traders were quick to take profits. MannKind closed down more than 13 percent on the day.
Jos. A. Bank (NASDAQ: JOSB) lost around 7 percent after the company said that its fiscal second-quarter financial results are likely to miss expectations.
Retailer Nordstrom (NYSE: JWN) fell almost 5 percent on Friday after the company released its fiscal second-quarter earnings results and cut its full-year guidance.
PowerSecure International (NASDAQ: POWR) fell more than 5.50 percent after its common stock offering priced at a discount to Thursday's closing price.
Related: A look at recent insider purchases.
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