Weakness prevailed throughout Friday's trading session, as investors cashed in on some of the recent gains. Some of the weakness came as investors digested mixed economic news and kept a close eye on a meeting between President Obama and the CEOs of the nation's biggest banks.
In economic news, the Commerce Department released its report on personal income and spending in the month of February earlier in the day, showing that spending increased for the second consecutive month.
The report showed that personal spending rose 0.2 percent in February following an upwardly revised 1.0 percent increase in January. The modest increase in spending came in line with the expectations of economists.
At the same time, the Commerce Department said that personal income edged down 0.2 in February after a downwardly revised 0.2 percent increase in the previous month. Economists had been expecting a slightly more modest 0.1 percent decrease.
The final reading of the Reuters/University of Michigan's consumer sentiment index for March was also released, showing a revised reading of 57.3. Economists had expected the consumer sentiment index to be lifted to 56.8 from the mid-month reading of 56.6.
Meanwhile, President Obama met with the CEO's of the country's biggest banks to discuss the economy and proposals to increase regulation of the financial system. The meeting came only days after the Obama administration revealed details on how they plan to improve the balance sheets of banks.
At the close of the roundtable discussion, some of the CEOs mentioned that Obama had emphasized the need to work together to solve the financial crisis and lift the economy out of recession.
In an interview with RTT News, Chuck Lieberman, chief investment officer for Advisors Capital Management, said he remains bullish despite the market's weakness on Friday. I think the bear market is really over, Lieberman said. The underlying trend now is firmly up.
Lieberman said he is using pullbacks as buying opportunities, calling the market very attractive and stocks very cheap. We think that stock prices will be considerably higher six months or a year out, he added.
The major averages all ended the session firmly in negative territory after ending Thursday's trading at one-month closing highs. The Dow closed down 148.38 points or 1.9 percent at 7,776.18, the Nasdaq closed down 41.80 points or 2.6 percent at 1,545.20 and the S&P 500 closed down 16.92 points or 2 percent at 815.94.
Despite the losses on the day, the major averages still closed higher for the third straight week due largely to the rally seen on Monday. The Dow rose 6.8 percent for the week, while the Nasdaq and the S&P 500 posted weekly gains of 6 percent and 6.2 percent, respectively.
Most of the major sectors showed notable moves to the downside over the course of the trading day following the broad based strength that was seen in the previous session.
While the weakness was very widespread, some of the biggest losses came out of the real estate sector, helping to drive the Morgan Stanley REIT Index down a whopping 5.6 percent.
Within the real estate sector, Cedar Shopping Centers Inc. (CDR), a Port Washington, NY-based real estate investment trust, posted one of the widest losses, closing down 14.1 percent on the day. With the decline, the stock closed at a level that challenges a recent multi-year closing low.
Additionally, as investors responded to some weakness in commodity prices, related stocks also suffered considerable weakness. With the price of crude oil closing down $1.96 at $52.38, the Philadelphia Oil Services Index ended the session down 4 percent.
Banking, healthcare provider, and software stocks also suffered notable losses during Friday's session. Among software stocks, Tibco (TIBX) closed down 4.9 percent after the company reported weaker than expected first quarter revenue.
The steep loss shown by the Dow came as the vast majority of the component of the blue chip index ended the session in negative territory.
JP Morgan (JPM) turned in one of the Dow's worst performances of the day, with the financial giant falling 5.8 percent after ending the previous session at a more than two-month closing high.
Citigroup (C) also suffered a substantial loss on the day, closing down 6.8 percent. Additionally, IBM (IBM), American Express (AXP), and Microsoft (MSFT) also posted noteworthy losses on the day.
At the other end of the spectrum, General Motors (GM) closed up 6.2 percent, ending the session at a two-month closing high. Coca-Cola (KO), Hewlett-Packard (HPQ), and Verizon (VZ) also posted modest gains.
In overseas trading, the stock markets across the Asia-Pacific region turned in a mixed performance on Friday. While Japan's Nikkei 225 Index closed down 0.1 percent, Hong Kong's Hang Seng Index ended the day up 0.1 percent.
Meanwhile, the major European markets ended the session considerably lower. The U.K.'s FTSE 100 Index ended the day with a 0.7 percent loss, while the French CAC 40 Index and the German DAX Index closed down 1.8 percent and 1.3 percent, respectively.
In the bond market, treasuries ultimately closed lower after seeing some strength earlier in the session. Subsequently, the yield on the benchmark 10-year note ended the session up 2.8 basis points at 2.761 percent.
While there are no major economic reports due to be released on Monday, there are several key reports that will be released over the course of the week, including the Labor Department's closely watched monthly employment report on Friday.
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