U.S. Stocks Give Back Ground Following Yesterday’s Rally

Stocks have moved moderately lower during trading on Friday, giving back ground following the rally seen in the previous session. The major averages have all moved to the downside, although selling pressure has remained relatively subdued.

Currently, the major averages are off their lows of the session but still in the red. The Dow is down 53.62 points or 0.1 percent at 41,971.57, the Nasdaq is down 61.37 points or 0.3 percent at 17,952.61 and the S&P 500 is down 16.24 points or 0.3 percent at 5,697.40.

The pullback on Wall Street may partly reflect profit taking, as traders cash in on some of the strong gains posted during Thursday’s session.

The Dow and the S&P 500 surged to new record closing highs on Thursday amid a positive reaction to the Federal Reserve’s decision to slash interest rates by half a percentage point.

However, traders seem reluctant to make more significant moves as they question what will be the next catalyst for the markets now that the Fed’s first rate cut is in the rearview mirror.

A lack of major U.S. economic data may also be keeping some traders on the sidelines ahead of the release of several key reports next week.

While the Fed has already signaled plans to continue lowering rates in the coming months, the data could still impact market sentiment.

Reports on durable goods orders, new home sales and consumer confidence are likely to attract attention next week along with a report on personal income and spending that includes the Fed’s preferred inflation gauge.

Sector News

Transportation stocks have shown a substantial pullback on the day, with the Dow Jones Transportation Average plunging by 3.3 percent after ending the previous session at its best closing level in over a year.

FedEx (FDX) has led the sector lower, plummeting by 14.9 percent after the delivery giant reported disappointing fiscal first quarter earnings and lowered its full-year guidance.

Considerable weakness is also visible among housing stocks, as reflected by the 1.6 percent loss being posted by the Philadelphia Housing Sector Index.

Semiconductor, steel and oil producer stocks are also seeing notable weakness, while gold stocks have moved sharply higher amid an increase by the price of the precious metal.

Other Markets

In overseas trading, stocks markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index shot up by 1.5 percent, while Hong Kong’s Hang Seng Index leapt by 1.4 percent.

Meanwhile, the major European markets have moved to the downside on the day. While the U.K.’s FTSE 100 Index has slumped by 1.2 percent, the French CAC 40 Index and the German DAX Index are both down by 1.4 percent.

In the bond market, treasuries are seeing modest weakness, extending a recent downward trend. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.6 basis points at 3.756 percent.

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