Stocks Close Modestly Lower But Well Off Worst Levels - U.S. Commentary

(RTTNews) - After coming under pressure over the course of morning trading on Friday, stocks regained some ground in the afternoon but still closed modestly lower. The major averages ended the day in negative territory but well off their worst levels.

The Dow edged down 28.01 points or 0.2 percent to 18,240.39, the Nasdaq slipped 14.45 points or 0.3 percent to 5,292.40 and the S&P 500 dipped 7.03 points or 0.3 percent to 2,153.74.

With the drop on the day, the major averages moved lower for the week. The Dow and the Nasdaq both fell by 0.4 percent, while the S&P 500 slid by 0.7 percent.

The lower close on Wall Street came following the release of a report from the Labor Department showing that U.S. employment increased by less than expected in the month of September.

The report said non-farm payroll employment climbed by 156,000 jobs in September compared to economist estimates for an increase of about 176,000 jobs.

While the job gains in August were upwardly revised to 167,000 from 151,000, the job growth in July was downwardly revised to 252,000 from 275,000.

The Labor Department also said the unemployment rate edged up to 5.0 percent in September from 4.9 percent in August. Economists had expected the unemployment rate to remain unchanged.

Meanwhile, the report said average hourly employee earnings rose by 6 cents to $25.79. Compared to the same month a year ago, average hourly earnings were up by 2.6 percent.

Speaking at the Institute of International Finance's annual meeting in Washington, D.C., Federal Reserve Vice Chair Stanley Fischer said the jobs data was "pretty close" to an ideal "Goldilocks" reading.

Fischer said the rate of job growth is "fully consistent" with a continued decline in unemployment and suggested the U.S. is close to full employment.

Analysts said the weaker than expected job growth should quell any speculation of an interest rate hike at Fed's next meeting in November, although a rate hike at the December meeting remains on the table.

Sector News

Chemical stocks showed a substantial move to the downside on the day, dragging the Dow Jones Chemicals Index down by 1.8 percent. The pullback by the index came after it ended the previous session at its best closing level in a month.

PPG Industries (PPG) led the chemical sector lower, slumping by 8.4 percent after warning of much weaker than expected third quarter earnings.

Significant weakness also emerged among housing stocks, as reflected by the 1.8 percent loss posted by the Philadelphia Housing Sector Index. Vulcan Materials (VMC) and Masco (MAS) turned in two of the sector's worst performances.

Natural gas, airline, and tobacco also came under pressure, while most of the other major sectors showed more modest moves on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the downside during trading on Friday. Japan's Nikkei 225 Index dipped by 0.2 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index advanced by 0.6 percent, the German DAX Index and the French CAC 40 Index both dropped by 0.7 percent.

In the bond market, treasuries showed a lack of direction throughout the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.736 percent.

Looking Ahead

While the economic calendar for next week starts off relatively light, traders are likely to keep a close eye on reports on retail sales and producer prices due next Friday.

The minutes of the latest Fed meeting are also likely to attract attention amid lingering uncertainty about the outlook for monetary policy.