Benchmarks lost their initial gains to end mostly flat as apprehensions about contracting profits of financial bellwethers dented investor sentiment on Friday. At the close of the trading session on Friday, markets recorded their worst weekly performance in four months. Benchmarks had started on a winning note boosted by an unexpected increase in consumer sentiment which touched its highest level in five years. However, the gains were eroded largely by a decline in the financial sector and benchmarks ended flat.
The Dow Jones Industrial Average (DJI) edged up 0.02% to close the day at 13,328.85. The Standard & Poor 500 (S&P 500) lost 0.3% to finish Friday’s trading session at 1,428.59. The tech-laden Nasdaq Composite Index slipped 0.2% to end at 3,044.11. The fear-gauge CBOE Volatility Index (VIX) was up 3.5% to settle at 16.14. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.5 billion shares, significantly lower than this year’s daily average of 6.52 billion shares. Declining stocks outpaced the advancers on the NYSE; as for 60% stocks that dropped, 35% stocks moved higher.
For the week, the Dow fell 2.1%, the S&P 500 lost 2.2% and the Nasdaq slumped 2.9%. Benchmarks suffered throughout the week and recorded their worst performance in four months. Markets did have a positive report to cheer about as initial claims touched their lowest level in more than four and half years. However, benchmarks were under pressure through the week as investors remained worried about how third-quarter earnings would shape up amid gloomy global economic conditions.
Benchmarks began on a winning note following news that consumer sentiment had jumped to the highest level in five years. The University of Michigan-Thomson Reuters preliminary October index rose to 83.1 from a final September reading of 78.3. The preliminary reading was also ahead of consensus estimates of 77.9. Consumer sentiment has been trending up since August; while August registered a two-point gain, the index jumped four points in September.
Despite positive data on consumer sentiment, the Consumer Discretionary SPDR slipped a mere 0.02%. Performance of the related stocks was mostly mixed. Stocks such as Costco Wholesale Corporation (NASDAQ:COST), Dollar General Corp. (NYSE:DG), Dollar Tree, Inc. (NASDAQ:DLTR) and Fred's, Inc. (NASDAQ:FRED) lost 0.8%, 0.7%, 5.0% and 0.7%, respectively. On the other hand, stocks such as Wal-Mart Stores, Inc. (NYSE:WMT), PriceSmart, Inc. (NASDAQ:PSMT), Target Corporation (NYSE:TGT) and Gordmans Stores, Inc (NASDAQ:GMAN) gained 1.1%, 1.3%, 0.4% and 0.8%, respectively.
Separately, the U.S. Bureau of Labor Statistics released Producer Price Index (PPI) data for the month of September. According to the report, PPI has increased 1.1% last month, beating consensus estimates of 0.8. Getting into the details of the report: “Prices for finished goods advanced 1.7 percent in August and moved up 0.3 percent in July. At the earlier stages of processing, prices received by manufacturers of intermediate goods rose 1.5 percent in September, and the crude goods index advanced 2.8 percent”.
Meanwhile, financial bellwethers JPMorgan Chase & Co (NYSE:JPM) and Wells Fargo & Company (NYSE:WFC) reported their earnings on Friday. JPM reported record third-quarter profits beating analysts’ estimates. The report was boosted by revenue from mortgage lending and fixed-income capital markets. However, Wells Fargo’s revenue and net margins came in below analysts’ expectations. Mixed results from both the companies have raised concerns about upcoming financial sector’s earnings.
The financial sector had a bad run and the Financial Select Sector SPDR (ETF) dropped 1.3%. Stocks such as JPM, Citigroup Inc. (NYSE:C), Goldman Sachs Group, Inc. (NYSE:GS), PNC Financial Services (NYSE:PNC) and Wells Fargo lost 1.1%, 2.2%, 1.5%, 2.8% and 2.6% respectively.
Going ahead, investors will have their eyes fixed on earnings results from Citigroup, Goldman Sachs, Intel Corporation (NASDAQ:INTC), Union Pacific Corporation (NYSE:UNP) and Verizon Communications Inc. (NYSE:VZ). So far, results from Alcoa, Yum! Brands and Safeway have been mixed.