U.S. Stocks Regain Ground After Early Move To The Downside

After coming under pressure early in the session, stocks have regained ground over the course of morning trading on Friday. The major averages have climbed well off their lows of the session, with the Dow reaching positive territory.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is down 76.08 points or 0.6 percent at 11,779.76 and the S&P 500 is down 16.21 points or 0.4 percent at 4,074.20, the narrower Dow is up 79.53 points or 0.2 percent at 33,776.38.

The early weakness on Wall Street reflected ongoing concerns about the outlook for interest rates following this week’s batch of economic data.

Reports on consumer and producer price inflation and retail sales have led to worries the Federal Reserve could raise rates higher than currently anticipated.

Recent comments from Fed officials have added to the concerns, with some suggesting the central bank could raise rates by another 50 basis points next month.

Selling pressure has waned over the course of the morning, however, with a report showing a continued decrease in U.S. import prices potentially helping to offset the negative sentiment.

The Labor Department said import prices dipped by 0.2 percent in January after edging down by a revised 0.1 percent in December. The modest decrease matched economist estimates.

With import prices declining for the seventh straight month, the annual rate of growth slowed to 0.8 percent in January from 3.0 percent in December.

The year-over-year growth was much slower than the 2.9 percent expected by economists and reflects the slowest annual growth since December 2020.

“Import prices provided some encouraging news on the inflation front after stronger than expected CPI and PPI reports earlier this week,” said Matthew Martin, US Economist at Oxford Economics.

He added, “The news, however encouraging, will likely factor little into the Fed’s decision to raise rates at the March meeting, and potentially the May meeting as well, as it continues to wrangle with stubborn inflation.”

Sector News

Despite the recovery attempt by the broader markets, energy stocks are seeing substantial weakness on the day, with a steep drop by the price of crude oil weighing on the sector.

With crude for April delivery plunging $2.61 to $75.88 a barrel, the NYSE Arca Oil Index is down by 2.7 percent and the Philadelphia Oil Service Index is down by 2.5 percent.

A sharp decline by the price of natural gas is also contributing to significant weakness among natural gas stocks, dragging the NYSE Arca Natural Gas Index down by 1.6 percent.

Housing, software and brokerage stocks are also seeing notable weakness, while telecom stocks have moved sharply higher on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index slid by 0.7 percent, while Hong Kong’s Hang Seng Index slumped by 1.3 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index is down by 0.3 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both down by 0.2 percent.

In the bond market, treasuries have climbed well off their worst levels but continue to see modest weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.2 basis points at 3.855 percent.

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