U.S. Stocks Close Mostly Lower Ahead Of Next Week’s Fed Meeting

Following the narrowly mixed close seen in the previous session, stocks showed a notable move to the downside during trading on Friday. The major averages all slid firmly into negative territory after ending Thursday’s trading on opposite sides of the unchanged line.

The major averages moved roughly sideways in afternoon trading, ending the day firmly in the red. The Dow fell 166.44 points or 0.5 percent to 34,584.88, the Nasdaq slumped 137.96 points or 0.9 percent to 15,043.97 and the S&P 500 slid 40.76 points or 0.9 percent to 4,432.99.

With the drop on the day, the major averages all moved lower for the week. The Dow edged down by 0.1 percent, while the Nasdaq and the S&P 500 dropped 0.5 percent and 0.6 percent, respectively.

The weakness on Wall Street came as traders looked ahead to the Federal Reserve’s highly anticipated monetary policy meeting next week.

The Fed is widely expected to leave monetary policy unchanged but could address the outlook for its asset purchase program.

The minutes of the Fed’s last meeting signaled the central bank was prepared to begin scaling back asset purchases by the end of the year.

With some recent disappointing economic data suggesting the Fed could push back its plans, traders are likely to pay close attention to the wording of the post-meeting statement.

Stocks saw some further downside following the release of a report from the University of Michigan showing U.S. consumer sentiment rebounded less than expected in September.

The report said the consumer sentiment index inched up by 71.0 in September from 70.3 in August. Economists had expected the index to rise to 72.2.

The modest increase came after the consumer sentiment index tumbled to its lowest level since December of 2011 in the previous month.

“The steep August falloff in consumer sentiment ended in early September, but the small gain still meant that consumers expected the least favorable economic prospects in more than a decade,” said Surveys of Consumers chief economist, Richard Curtin.

Sector News

Steel stocks saw substantial weakness on the day, dragging the NYSE Arca Steel Index down by 4 percent to its lowest closing level in five months.

U.S. Steel (X) led the way lower, plummeted by 8 percent after updating its third quarter guidance and announcing plans to spend about $3 billion to build a new mill.

Significant weakness was also visible among oil service stocks, as reflected by the 2.5 percent slump by the Philadelphia Oil Service Index. The weakness in the sector came as crude oil for October delivery slid $0.64 to $71.97 a barrel.

Chemical stocks also saw considerable weakness on the day, resulting in a 1.9 percent drop by the S&P Chemical Sector Index. The index fell to a two-month closing low.

Tobacco, computer hardware, and semiconductor stocks also showed notable moves to the downside, 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 climbed by 0.6 percent, while Hong Kong’s Hang Seng Index jumped by 1 percent.

Meanwhile, the major European markets moved to the downside over the course of the session. While the French CAC 40 Index slid by 0.8 percent, the U.K.’s FTSE 100 Index and the German DAX Index slumped by 0.9 percent and 1 percent, respectively.

In the bond market, treasuries extended the pullback seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 3.9 basis points to 1.370 percent.

Looking Ahead

The Fed’s post-meeting statement is likely to be in the spotlight next week, overshadowing a slew of U.S. housing data.

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