After coming under pressure early in the session, stocks continue to see notable weakness in afternoon trading on Friday. With the pullback on the day, the major averages are partly offsetting the strong gains posted in the previous session.
Currently, the major averages are off their lows of the session but still firmly negative. The Dow is down 358.55 points or 1.1 percent at 31,888.00, the Nasdaq is down 82.98 points or 0.7 percent at 11,634.30 and the S&P 500 is down 40.26 points or 1.0 percent at 3,920.02.
The pullback on Wall Street comes as some traders look to cash in on yesterday’s rally amid lingering concerns about turmoil in the financial sector.
Shares of First Republic Bank (FRC) are showing a significant pullback on the day, plunging by 25.0 percent after surging by 10.0 percent on Thursday.
The jump in the previous session came as a group of financial institutions agreed to deposit $30 billion in First Republic in an effort to express confidence in the banking system.
“U.S. stocks are weakening on fears that this week’s banking turmoil will lead to tighter lending standards that will cripple small businesses and eventually send this economy into a recession,” said Edward Moya, senior market analyst at OANDA.
He added, “The Fed’s rate hiking cycle was already feeling restrictive, so now that we have rising risks of more bank bailouts and even tighter credit standards, the growth outlook for the economy is rather bleak.”
In U.S. economic news, the Federal Reserve released a report showing U.S. industrial production was unexpectedly unchanged in the month of February.
The Fed said industrial production was unchanged in February following a revised 0.3 percent increase in January. Economists had expected industrial production to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.
A separate report from the University of Michigan showed consumer sentiment in the U.S. fell for the first time in four months in March.
The report said the consumer sentiment index slid to 63.4 in March from 67.0 in February. Economists had expected the index to be unchanged.
Surveys of Consumers Director Joanne Hsu noted the decrease was already fully realized prior to the failure of Silicon Valley Bank.
Meanwhile, the report showed decreases in both near-term and long-term inflation expectations, with year-ahead inflation expectations falling to the lowest level since April 2021.
Banking stocks continue to see substantial weakness after rebounding in the previous session, with the KBW Bank Index plunging by 5.1 percent.
Considerable weakness also remains visible among oil service stocks, as reflected by the 2.8 percent nosedive by the Philadelphia Oil Service Index.
The sell-off by oil service stocks comes as the price of crude for April delivery is tumbling $1.45 to $66.90 a barrel.
Airline stocks have also shown a significant move to the downside on the day, dragging the NYSE Arca Airline Index down by 2.6 percent.
Natural gas, brokerage and biotechnology stocks are also seeing notable weakness, while gold stocks are bucking the downtrend amid a spike by the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index shot up by 1.2 percent, while China’s Shanghai Composite Index climbed by 0.7 percent.
Meanwhile, the major European markets showed notable moves to the downside on the day. While the U.K.’s FTSE 100 Index slumped by 1.0 percent, the German DAX Index and the French CAC 40 Index tumbled by 1.3 percent and 1.4 percent, respectively.
In the bond market, treasuries have rebounded after turning lower over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 14.9 basis points at 3.436 percent.
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