FOX Business: Capitalism Lives Here
Continue Reading Below
The Dow and S&P ended the week just slightly beneath their record highs. However, the commodities complex came under intense selling pressure.
According to preliminary calculations, the Dow Jones Industrial Average fell 0.08 point, or 0.00%, to 14865, the S&P 500 dropped 4.5 points, or 0.28%, to 1589 and the Nasdaq Composite slumped 5.2 points, or 0.16%, to 3295.
The Dow and S&P 500 closed out the day record highs on Thursday -- the fourteenth time this year for the blue-chip average. However, sentiment was much gloomier on Friday.
Gold prices plummeted into bear market territory as traders ditched the yellow metal. The benchmark contract slid $63.50, or 4.1%, to $1,501 a troy ounce. It now trades at levels not seen since July 2011.
Energy futures weren't spared, either. The benchmark U.S. crude oil contract skidded $2.22, or 2.4%, to $91.29 a barrel. Wholesale New York Harbor gasoline sold off by 1% to $2.81 a gallon.
Olivier Jakob, managing director at Petromatrix in Switzerland, said a "continued evolution" in the structure of the American crude market was to blame for the sudden downward momentum in U.S. oil. He said an increase in pipeline and railway capacity was boosting supplies at critical ports in America. That, coupled with reduced refining margins, was turning traders bearish.
Jakob said there could be a floor around $90 a barrel on U.S. crude because there is a glut of so-called put contracts set right below that level. A put is an agreement to sell at a certain price.
On the economic front, the Commerce Department said U.S. retail sales dropped 0.4% in March, compared to expectations that they would hold steady. Excluding the auto segment, sales were down 0.4% for the month, also falling short of forecasts of no change.
A report from the Labor Department showed prices at the producer level dropped 0.6% in March from February, the biggest drop since last May, and steeper than the 0.2% decrease economists expected. The sharp drop was led by a 3.4% plunge in energy prices. Excluding the food and energy components, prices rose 0.2%, matching forecasts.
A report from Reuters and the University of Michigan showed consumer sentiment plunging in early April. The gauge dropped to 72.3 from 78.6 in March, missing expectations of 78.5.
J.P. Morgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) kicked off bank earnings season with profits that beat expectations, but shares of both banking giants dropped in early trade. Chase, the biggest U.S. bank by assets, unveiled first-quarter profits of $1.41 a share, excluding certain items, compared to estimates of $1.39. Revenues of $25.8 billion essentially matched forecasts.
Wells Fargo posted first-quarter profits of 92 cents a share, topping estimates of 88 cents. Revenues of $21.3 billion came in shy of expectations of $21.6 billion. Shares dropped more than 1% in pre-market trading.
Michael Block, chief equities strategist at Phoenix Partners Group, said that traders were concerned about several technical factors. For one, he said, the release of loan-loss reserves have helped pad profits and help increase the size of the beats on the bottom lines. Also, net interest margins, which are a measure of the interest rates banks receive for loans compared to what they need to pay to depositors, have caused worries, he said.
The Euro Stoxx 50 sold off by 1.2% to 2642, the English FTSE 100 dipped 0.38% to 6391 and the German DAX plummeted 1.4% to 7765.
In Asia, the Japanese Nikkei 225 edged lower by 0.47% to 13485 and the Chinese Hang Seng ticked lower by 0.06% to 22089.