U.S. Close Modestly Lower After Seeing Early Strength

(RTTNews) - After an early move to the upside, stocks moved mostly lower over the course of the trading session on Friday. The major averages pulled back off their early highs and into negative territory after moving sharply higher over the two previous sessions.

The Nasdaq and the S&P 500 reached nine-month intraday highs in early trading but ended the day in the red. The Nasdaq dipped 30.94 points or 0.2 percent to 12,657.90 and the S&P 500 edged down 6.07 points or 0.1 percent to 4,191.98, while the Dow fell 109.28 points or 0.3 percent to 33,426.63.

Despite the modest pullback on the day, the major averages all moved higher for the week. The Nasdaq surged by 3.0 percent, the S&P 500 jumped by 1.7 percent and the Dow rose by 0.4 percent.

The downturn on Wall Street came as Republican negotiators walked out of a meeting over raising the U.S. debt ceiling, offsetting recent optimism about an impending deal.

"Until people are willing to have reasonable conversations about how you can actually move forward and do the right thing, then we're not gonna sit here and talk to ourselves," Rep. Garret Graves, R-La., told reporters.

Graves, who is House Speaker Kevin McCarthy's, R-Calif., lead negotiator on the debt limit, added, "We've decided to press pause, because it's just not productive."

Even with the U.S. potentially facing default as soon as June 1st, Graves said he did not know if talks would resume this weekend.

The latest developments come after McCarthy and President Joe Biden had both recently expressed optimism about reaching an agreement.

Selling pressure remained relatively subdued, however, as traders still expect lawmakers to eventually reach a debt ceiling deal.

Comments from Federal Reserve Chair Jerome Powell reinforcing expectations the central bank will leave interest rates unchanged next month also helped limit the downside.

Citing recent turmoil in the banking sector, Powell suggested interest rates "may not need to rise as much as it would have otherwise to achieve our goals."

However, Powell noted inflation remains too high and stressed the Fed would be "steadfast" in pursuit of its goal of bringing inflation down to its 2 percent target.

Sector News

Airline stocks moved sharply lower over the course of the session, dragging the NYSE Arca Airline Index down by 1.8 percent. The index pulled back further off the two-month closing high set on Wednesday.

Significant weakness also emerged among housing stocks, with the Philadelphia Housing Sector Index falling by 1.4 percent after reaching its best intraday level in well over a year in early trading.

Retail stocks also moved to the downside as the day progressed, resulting in a 1.3 percent drop by the Dow Jones U.S. Retail Index.

On the other hand, biotechnology stocks turned in a strong performance on the day, driving the NYSE Arca Biotechnology Index up by 1.1 percent.

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 advanced by 0.8 percent, while Hong Kong's Hang Seng Index tumbled by 1.4 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the French CAC 40 Index and the German DAX Index climbed by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries recovered from early weakness before once again closing in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.4 basis points to a new two-month closing high of 3.692 percent.

Looking Ahead

Developments regarding the debt ceiling negotiations are likely to remain in focus next week, while traders are also likely to keep an eye on reports on new home sales, durable goods orders and personal income and spending as well as the minutes of the latest Fed meeting.