U.S. Stocks Close Sharply Lower After Failed Recovery Attempt

Stocks staged a recovery attempt in afternoon trading on Friday after coming under pressure early in the session but pulled back sharply going into the close. The Dow posted a steep loss after recording its biggest three-day spike since 1931.

The major averages all finished the day substantially lower. The Dow plunged 915.39 points or 4.1 percent to 21,636.78, the Nasdaq tumbled 295.16 points or 3.8 percent to 7,502.38 and the S&P 500 dove 88.60 points or 3.4 percent to 2,541.47.

Despite the pullback on the day, the major averages moved sharply higher for the week. The Dow spiked by 12.8 percent, while the Nasdaq and the S&P 500 soared by 9.1 percent and 10.3 percent, respectively.

The recovery attempt in afternoon trading came after the House passed the massive $2 trillion stimulus bill designed to respond to the economic fallout from the coronavirus pandemic.

Republican Congressman Thomas Massie of Kentucky injected some last-minute drama, but the relief package was eventually approved by voice vote, as expected.

Buying interest waned late in the session, however, leading traders to sell stocks once again amid uncertainty going into the weekend.

Profit taking contributed to the early weakness on Wall Street, as some traders looked to cash in on the strong gains seen in recent days.

Lingering concerns about the economic impact of the coronavirus also weighed on the markets, as the number of confirmed cases in the U.S. surpassed the number of cases in China or Italy.

According to data from Johns Hopkins University, there have been more than 97,000 confirmed coronavirus cases in the U.S. and nearly 1,500 deaths.

Adding to the negative sentiment, the University of Michigan released a report showing consumer sentiment deteriorated by much more than initially estimated in the month of March.

The report said the consumer sentiment index for March was downwardly revised to 89.1 from the preliminary reading of 95.9.

The consumer sentiment index is now down sharply from the final February reading of 101.0, reflecting the fourth largest one-month decline in nearly a half-century.

Sector News

Energy stocks turned in some of the market’s worst performances on the day, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index plunging by 7.4 percent and 6.4 percent, respectively.

The weakness among energy stocks came amid a steep drop by the price of crude oil, as crude for May delivery slumped $1.09 to $21.51 a barrel.

Substantial weakness was also visible among gold stocks, which moved sharply lower along with the price of the precious metal. With gold for April delivery tumbling $26.20 to $1,625 an ounce, the NYSE Arca Gold Bugs Index plummeted by 5.9 percent.

Semiconductor stocks also showed a significant move to the downside on the day, dragging the Philadelphia Semiconductor Index down by 5.3 percent.

Housing, steel, computer hardware, and transportation stocks also saw considerable weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index surged up by 3.9 percent, while Hong Kong’s Hang Seng Index rose by 0.6 percent.

Meanwhile, the major European markets showed substantial moves back to the downside on the day. While the U.K.’s FTSE 100 Index plummeted by 5.3 percent, the French CAC 40 Index plunged by 4.2 percent and the German DAX Index tumbled by 3.7 percent.

In the bond market, treasuries extended the upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.2 basis points to 0.749 percent.

Looking Ahead

Next week, the Labor Department’s monthly jobs report is likely to attract attention, although a lot other developments may also catch traders’ eyes before the release of the data next Friday.

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