Tech Stock Sell-Off Leads To Weakness On Wall Street - U.S. Commentary

(RTTNews) - After failing to sustain an initial upward move, stocks moved notably lower over the course of the trading day on Friday. Technology stocks helped to lead the markets lower, contributing to a particularly steep drop by the tech-heavy Nasdaq.

The Nasdaq substantially underperformed its counterparts for the second straight day, plunging by 110.01 points or 2.6 percent to 4,127.73. The Dow fell 159.84 points or 1 percent to 16,412.71 and the S&P 500 slid 23.68 points or 1.3 percent to 1,865.09.

For the week, the major averages turned in a mixed performance. While the Nasdaq dropped by 0.7 percent, the Dow and the S&P 500 rose by 0.5 percent and 0.4 percent, respectively.

The initial strength on Wall Street came following the release of the Labor Department's closely watched monthly jobs report.

While employment increased by slightly less than expected in the month of March, the report also showed upward revisions to the job growth in the two previous months.

The Labor Department said non-farm payroll employment rose by 192,000 jobs in March compared to economist estimates for an increase of about 200,000 jobs.

At the same time, the report also showed that employment in January and February increased by 144,000 jobs and 197,000 jobs, respectively, reflecting a net upward revision of 37,000.

Peter Boockvar, managing director at the Lindsey Group, said, "Bottom line, including the previous months revisions, the overall data was slightly better than expected, but the pronounced bounce back that many had hoped for was more muted."

Despite the continued job growth, the unemployment rate held unchanged at 6.7 percent in March. Economists had expected the unemployment rate to dip to 6.6 percent.

The early upward move lifted the Dow and the S&P 500 to new record intraday highs, but buying interest waned not long after the open.

Traders subsequently cashed in on the recent strength in the markets amid uncertainty about the near-term outlook for the markets and whether the state of the economy supports further upside.

Sector News

While tech stocks helped to lead the markets lower, substantial weakness was also visible in the brokerage sector. The NYSE Arca Broker/Dealer Index plunged by 3.6 percent to its lowest closing level in almost two months.

E*Trade (ETFC) and KCG Holdings (KCG) turned in two of the brokerage sector's worst performances, tumbling by 7.9 percent and 6.9 percent, respectively.

Biotechnology stocks also extended the steep drop seen in the previous session, with the NYSE Arca Biotechnology Index falling by 3.2 percent. Illumina (ILMN), Alexion Pharmaceuticals (ALXN), and InterMune (ITMN) posted steep losses.

Significant weakness among electronic storage, semiconductor, and networking stocks also contributed to the sharp drop by the tech-heavy Nasdaq.

Most of the other major sectors also came under pressure on the day, with airline, defense, and telecom stocks seeing notable weakness.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan's Nikkei 225 Index edged down by 0.1 percent, while China's Shanghai Composite Index advanced by 0.7 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index rose by 0.8 percent, the U.K.'s FTSE 100 Index and the German DAX Index both ended the day up by 0.7 percent.

In the bond market, treasuries moved notably higher in reaction to the monthly employment report. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.4 basis points to 2.726 percent.

Looking Ahead

Following the slew of key economic data released over the past week, the economic calendar for next week is relatively light.

Traders may subsequently turn their attention to earnings news, with Alcoa (AA), JP Morgan (JPM), and Wells Fargo (WFC) among the companies due to report their quarterly results as the latest earnings season gets underway.

Nonetheless, trading could still be impacted by the release of reports on weekly jobless claims, producer prices, and consumer sentiment as well as the minutes of the latest Federal Reserve meeting.