With traders looking ahead to next week’s Federal Reserve meeting, stocks moved mostly lower over the course of the trading session on Friday. With the downward move, the Nasdaq (NASDAQI:COMP) and the S&P 500 (SPI:SP500) closed lower for the third straight day.

The major averages finished the day off their worst levels but still firmly negative. The Nasdaq slumped 155.36 points or 1.0 percent to 15,973.17, the S&P 500 slid 33.39 points or 0.7 percent to 5,117.09 and the Dow (DOWI:DJI) fell 190.89 points or 0.5 percent to 38,714.77.

For the week, the tech-heavy Nasdaq declined by 0.7 percent, while the S&P 500 edged down by 0.1 percent and the Dow was nearly unchanged.

The weakness on Wall Street partly reflected concerns about the outlook for interest rates ahead of the Fed’s monetary policy meeting next week.

While the Fed is widely expected to leave interest rates unchanged, traders will look to the accompanying statement for clues about the outlook for rates.

Recent hotter-than-expected inflation readings have reduced optimism about the likelihood of the Fed’s first rate cut coming in June.

According to the CME Group’s FedWatch Tool, the probability of the Fed leaving rates unchanged at its June meeting has climbed from 25 percent to 43.3 percent.

On the U.S. economic front, a report released by the Labor Department showed import prices in the U.S. increased in line with economist estimates in the month of February.

The Labor Department said import prices rose by 0.3 percent in February after climbing by 0.8 percent in January. The uptick matched expectations.

Meanwhile, the report said export prices advanced by 0.8 percent in February following an upwardly revised 0.9 percent increase in January.

Economists had expected export prices to edge up by 0.2 percent compared to the 0.8 percent growth originally reported for the previous month.

The Fed also released a report showing a slight increase in U.S. industrial production in the month of February, with manufacturing and mining output recovering from weather-related declines in January

The Fed said industrial production inched up by 0.1 percent in February after falling by a downwardly revised 0.5 percent in January.

Economists had expected industrial production to come in unchanged compared to the 0.1 percent dip originally reported for the previous month.

Meanwhile, preliminary data released by the University of Michigan unexpectedly showed a slight deterioration in U.S. consumer sentiment in the month of March.

The report said the consumer sentiment index edged down to 76.5 in March after falling to 76.9 in February. Economists had expected the index to come in unchanged.

Year-ahead and long-run inflation expectations remained unchanged from the previous month at 3.0 percent and 2.9 percent, respectively.

The Federal Reserve Bank of New York also released a report showing New York manufacturing activity has contracted at a significantly accelerated rate in the month of March.

Sector News

Software stocks saw substantial weakness on the day, with the Dow Jones U.S. Software Index plunging by 2.7 percent after ending Thursday’s session at its best closing level in over a month.

Adobe (NASDAQ:ADBE) led the sector lower, plummeting by 13.7 percent after reporting better than expected fiscal first quarter results but providing disappointing revenue guidance for the current quarter.

Considerable weakness also emerged among computer hardware stocks, as reflected by the 1.2 percent loss posted by the NYSE Arca Computer Hardware Index.

Retail stocks also showed a notable move to the downside on the day, dragging the Dow Jones U.S. Retail Index down by 1.2 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday. Hong Kong’s Hang Seng Index tumbled by 1.4 percent and Japan’s Nikkei 225 Index fell by 0.3 percent, although China’s Shanghai Composite Index bucked the downtrend and rose by 0.5 percent.

Meanwhile, the major European markets turned in a lackluster performance on the day. While the U.K.’s FTSE 100 Index dipped by 0.2 percent, the German DAX Index and the French CAC 40 Index ended the day roughly flat.

In the bond market, treasuries showed a lack of direction over the course of the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by less than a basis point to 4.304 percent.

Looking Ahead

The Fed’s monetary policy meeting is likely to be in the spotlight next week, overshadowing reports on homebuilder confidence, housing starts and existing home sales.

Source: RTTNEWS