Stocks Close Sharply Lower For Second Consecutive Session - U.S. Commentary

(RTTNews) - Stocks moved sharply lower over the course of the trading day on Friday, adding to the steep losses posted in the previous session. With the sell-off on the day, the major averages fell to their lowest closing levels in two months.

The major averages saw further downside going into the close, ending the day at their lows of the session. The Dow plummeted 367.39 points or 2.1 percent to 17,128.45, the Nasdaq tumbled 79.47 points or 1.6 percent to 4,923.08 and the S&P 500 plunged 36.37 points or 1.8 percent to 2,005.52.

As a result of the losses on the day, the major averages all closed lower for the week. The Dow fell by 0.8 percent, while the Nasdaq and the S&P 500 edged down by 0.2 percent and 0.3 percent, respectively.

The weakness on Wall Street was partly due to profit taking, as traders continued to cash in on the strong gains posted earlier in the week.

The markets closed higher for three straight days before pulling back on Thursday, with stocks rallying strongly on Wednesday following the Federal Reserve's first interest rate hike in over nine years.

While the Fed stressed any further rate hikes would be gradual, the central bank's focus on incoming data may have generated some anxiety.

A continued decrease by the price of crude oil also weighed on stocks, with crude for January delivery slipping $0.22 to $34.73 barrel.

The price of crude oil has fallen to its lowest levels in nearly seven years amid ongoing concerns about a global supply glut.

The selling pressure also came amid a "quadruple witching" Friday, a day when stock and index options and stock and index futures all expire.

Among individual stocks, shares of CarMax (KMX) moved sharply lower after the use car dealer reported weaker than expected third quarter results.

Fossil Group (FOSL) also posted a notable loss after Goldman Sachs downgraded its rating on the watchmaker to Sell from Neutral.

On the other hand, shares of BlackBerry (BBRY) showed a strong move the upside after the smartphone maker reported a much narrower than expected third quarter loss.

Sector News

Trucking stocks showed a substantial move to the downside on the day, dragging the Dow Jones Trucking Index down by 3.2 percent. With the loss, the index fell to its lowest closing level in well over a year.

Knight Transportation (KNX) helped to lead the trucking sector lower, tumbling 5.9 percent after cutting its fourth quarter earnings guidance.

Considerable weakness was also visible among oil service stocks, which moved lower along with the price of crude oil. The Philadelphia Oil Service Index also hit its lowest closing level in over a year, slumping by 2.9 percent.

Financial stocks also saw significant weakness, adding to the steep losses posted in the previous session. The Dow Jones Banks Index and the NYSE Arca Broker/Dealer Index fell by 2.9 percent and 2.4 percent, respectively.

Software, housing, railroad, and computer hardware stocks also came under pressure on the day, while gold stocks bucked the downtrend amid a rebound by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index plummeted by 1.9 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

The major European markets also moved back to the downside after yesterday's rally. While the U.K.'s FTSE 100 Index dropped by 0.8 percent, the French CAC 40 Index and the German DAX Index slumped by 1.1 percent and 1.2 percent, respectively.

In the bond market, treasuries moved higher amid the continued weakness on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.9 basis points to 2.199 percent.

Looking Ahead

Trading activity is likely to be relatively subdued next week, as many traders will be away from their desks ahead of the Christmas Day holiday on Friday.

Nonetheless, some key economic data is due to be released in the days leading up to the holiday, including reports on new and existing home sales, durable goods orders, and personal income and spending.