U.S. Stocks Hit Hard by Late Session Selling

The last week of the year ended with hard assets closing higher and paper assets finishing lower. Although it’s too early to read into the meaning of this, it should be noted, especially since the new year is going to begin with the U.S. Dollar under tremendous pressure due to political tensions, worries over a new Fed Chair and concerns over the impact of Fed interest rate hikes and U.S. tax reform on U.S. economic growth in 2018.

U.S. Equity Indexes

The three major stock index finish lower on Friday after the equity markets were hit with a wave of selling pressure shortly before the close. According to traders, selling pressure suddenly accelerated in the last several minutes heading into Friday’s close for no apparent reading. When the dust finally settled, all major sectors showed losses. Some traders chalked up the move to aggressive position-paring of highly profitable positions, geared towards reducing risk exposure.

Volume continued to remain well-below average, coming in more than 1 billion shares below its 50-day average. Volume was down all week with the market closed on Monday due to the Christmas holiday and ahead of the closure next Monday because of the New Year’s Day holiday.

In the cash market, the benchmark S&P 500 Index settled at 2673.61, down 13.93 or -0.52%. The blue chip Dow Jones Industrial Average closed at 24719.22, down 118.29 or -0.48% and the tech-based NASDAQ-100 Index finished at 6908.05, down -42.11 or -0.61%.

Most major stock indexes were down in Europe on the last day of trading with the DAX settling at 12917.64, down 62.30 or -0.48%. The U.K.’s FTSE 100 was the exception. It settled at 7687.77, up 64.89 or +0.85%, boosted by a strong performance in mining stocks.

The markets finished mixed in Asia. Japan’s Nikkei closed at 22764.94, down 19.04 or -0.08%. Banks were up, automakers and tech stocks mixed and retailers lower. In Australia, the S&P/ASX 200 settled at 6065.10, down 23.00 or -0.38%. However, the surge in iron ore and copper continued to be supportive for mining stocks.

U.S. Treasury Markets

The yield on the benchmark 10-year Treasury note was lower on Friday, settling near 2.42 percent. The yield on the 30-year Treasury bond was little changed at 2.76 percent. Volume was extremely light due to an early close. Additionally, most investors were on the sidelines ahead of next week’s slew of economic reports.