Stocks Still Down After Upbeat Consumer Sentiment Reading
Stocks remain moderately lower in mid-morning trading on Friday, with concerns about potential monetary policy tightening in China overshadowing an improvement in U.S. consumer sentiment.
The major averages have moved to the downside in recent dealing, with the Nasdaq and the S&P 500 falling to new sessions lows. The Dow is down 53.96 points or 0.5 percent at 11,229.14, the Nasdaq is down 15.28 points or 0.6 percent at 2,540.24 and the S&P 500 is down 9.19 points or 0.8 percent at 1,204.35.
Sentiment among American consumers saw a notable improvement in the month of November, according to a report released a short time ago by Reuters and the University of Michigan.
The consumer sentiment index rose to a reading of 69.3 in November from the final October reading of 67.7. Economists had been expecting the index to increase to a reading of 69.0.
Nonetheless, selling pressure remains after a report released earlier this week showing Chinese consumer price growth at its sharpest level in roughly two years and new limits on foreign corporate property holdings added to the likelihood of further policy tightening by the Chinese government.
The news spooked the Chinese markets and has caused consternation in equity markets worldwide.
With earnings season coming to a close, department store operator JC Penney (JCP) posted third quarter net income of $44 million or $0.19 per share. On average, analysts expected the company to report earnings of $0.17 per share.
JC Penney's net sales for the quarter remained relatively flat with last year at $4.2 billion, coming roughly in-line with estimates for revenues of $4.22 billion. The company's fourth quarter and full-year forecasts were in-line with estimates.
Homebuilder DR Horton Inc. (DHI) reported that its fourth-quarter net loss narrowed to $0.03 per share, while analysts had forecast a loss of $0.04 per share. Homebuilding revenue totaled $925.7 million, firmly topping projections for revenues of $854.03 million for the quarter.
On Thursday, media giant Walt Disney Co. (DIS) said that its fourth quarter profit fell 7 percent from last year, hurt by the adverse impact of the timing of the recognition of previously deferred revenues at ESPN and the effect of one fewer week of operations.
Graphics chipmaker Nvidia Corp. (NVDA) said that its third-quarter profit declined by 21 percent from last year due to lower revenues and higher expenses. Looking ahead, the company forecast fourth-quarter revenue above analysts' expectations.
Oil service, gold, steel and natural gas stocks are seeing some of the heaviest selling amid concerns about China's level of demand being lowered by prospective tightening measures.
Notably, the NYSE Arca Steel Index is down by 2.1 percent, moving further away from the seven-month closing high set earlier this month.
The weakness among gold and oil stocks also comes as the price of gold is down $18 at $1,385.30 an ounce and the price of crude oil has dropped $1.64 to $86.17 a barrel.
Telecommunications, defense, housing and banking stocks are also under pressure, contributing to the downside in today's session.
Meanwhile, some strength is visible among semiconductor stocks following Nvidia's quarterly results. Nvidia is up by 7.9 percent, setting a six-month intraday high.
Stocks Driven By Analyst Comments
Geokinetics (GOK) is trading higher after being upgraded by Howard Weil from Market Perform to Market Outperform. The broker also raised its target on the stock from $6 to $11. The stock is up by 0.6 percent after setting a six and a half month intraday high.
On the other hand, Dril-Quip (DRQ) is under pressure after being downgraded at CapitalOne Southcoast from Add to Neutral. The stock is down by 3.3 percent, slipping from an all-time closing high set on Thursday.
Constellation Brands (STZ) is also moving lower after Standpoint Research lowered their rating on shares of the alcoholic libations maker from Buy to Hold. The stock is posting a loss of 1.9 percent, falling from the two-year closing high set yesterday.
In overseas trading, stock markets in the Asia-Pacific region ended sharply lower on Friday. Japan's benchmark Nikkei 225 Index fell by 1.4 percent and Hong Kong's Hang Seng Index declined by 1.9 percent.
Meanwhile, the major European markets are mixed. While the German DAX Index and the U.K.'s FTSE 100 Index are up by 0.2 percent and 0.1 percent, respectively, the French CAC 40 Index is down by 0.6 percent.
In the bond markets, treasuries are seeing moderate weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 2.691 percent, posting a gain of 4.3 basis points.