Another day of selling pressure in bio-tech and technology stocks dragged the benchmarks down on Friday. Also, disappointing corporate earnings weighed on the markets. However, higher wholesale prices in March and an increase in preliminary consumer sentiment in April failed to restrict the day’s loss.
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The Dow Jones Industrial Average (DJI) dropped 0.9% to close Friday’s trading session at 16,026.75. The Standard & Poor (S&P 500) too declined 0.9% to finish at 1,815.69. The tech-laden Nasdaq Composite Index plunged 1.3% to 3,999.73. The fear-gauge CBOE Volatility Index (VIX) surged 7.2% to settle at 17.03. Total volume on the New York Stock Exchange was 3.7 billion shares. Advancing stocks were outnumbered by declining stocks on the NYSE. For 28% stocks that advanced, 69% declined.
The tech-heavy Nasdaq ended in the red zone on Friday, once again dragged down by declines in bio-tech and technology stocks. The Nasdaq fell below the key technical level of 4,000 for the first time since February. For the week, the Nasdaq slumped 3.1%, its worst weekly percentage drop since July 2012. It also marked third consecutive week of loss for Nasdaq.
The S&P 500 moved below its 50-day moving average. It is now almost 4% lower than its April 2 record close of 1,885.52. For the week, the S&P 500 fell 2.6%. The blue-chip index ended lower by 2.3% for the week, snapping a three-week rising streak.
Benchmarks declined for the week due to intense selling pressure in momentum and technology stocks. Separately, discouraging Chinese trade data unnerved investors. Biopharmaceutical company Pfizer was a big drag at the start of the week. Shares of Pfizer were down almost 3% after its breast-cancer drug palbociclib did well in clinical trials but the overall survival benefits was not yet revealed to be statistically significant. However, on Wednesday, benchmarks soared primarily boosted by the encouraging minutes from the central bank’s policy meeting.
Coming back to Friday’s events, declines in bio-tech and technology stocks again had a negative impact on the benchmarks. Shares of bio-tech companies such as Biogen Idec Inc. (NASDAQ:BIIB), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Amgen Inc. (NASDAQ:AMGN) and Celgene Corporation (NASDAQ:CELG) plummeted 4.7%, 4.0%, 1.9% and 2.2%, respectively. Overall, the Health Care Select Sector SPDR (XLV) dropped 0.9%.
Internet and related stocks such as Facebook, Inc. (NASDAQ:FB), LinkedIn Corporation (NYSE:LNKD), Yahoo! Inc. (NASDAQ:YHOO) and Google Inc. (NASDAQ:GOOG) decreased 1.1%, 2.5%, 1.6% and 1.9%, respectively. Overall, the Technology Select Sector SPDR (XLK) was down 1.1%.
Also, stocks from the Consumer Discretionary sector such as online retailer Amazon.com Inc. (NASDAQ:AMZN), online movie rental company Netflix, Inc. (NASDAQ:NFLX), online travel company TripAdvisor Inc. (NASDAQ:TRIP) and The Priceline Group Inc. (NASDAQ:PCLN) declined 1.7%, 2.4%, 3.6% and 1.8%, respectively. The Consumer Discretionary Select Sector SPDR (XLY) led the decline among the S&P 500 sectors. The sector dropped 1.4%. All the 10 sectors of the S&P 500 ended in the red.
Also, dismal corporate earnings results from JPMorgan Chase & Co. (NYSE:JPM) had a negative impact on the markets. The financial behemoth led the decline among the Dow components after its shares plunged 3.7%. The banking giant came out with first quarter earnings of $1.28 per share that fell short of Zacks Consensus Estimate of $1.41 per share. This is also significantly lower from the year-ago number of $1.59 per share.
Meanwhile, shares of Wells Fargo & Company (NYSE:WFC) rose 0.8% after the company reported first quarter earnings of $1.05 per share, more than the Zacks Consensus Estimate of 97 cents per share.
On the economic front, the U.S. Bureau of Labor Statistics reported that the U.S. Producer Price Index (PPI) for finished goods increased 0.5% in March, more than the consensus estimate of a rise by 0.1%. This rise in PPI was in sharp contrast to a fall by 0.1% in February. Rise in cost for service providers like food and clothing retailers were cited to be the reason for the rise in U.S. wholesale prices.
Separately, the University of Michigan and Thomson Reuters’ preliminary reading of consumer sentiment increased in April and touched the highest level in nine months. The gauge was at 82.6 in April, more than the consensus forecast of it rising to 81.6.