On Friday, the Dow Jones Industrial Average (DIA), along with other major averages, had barely posted gains. They dipped by a large amount in morning trading, but pared most losses as the day went on. Part of the reason the market could have recovered from the lows could have probably been short sellers covering before the weekend. As to why the market was pressured on Friday, there are several causes. Weaker earnings by some companies, poor economic data, and Bank of Japan lacking conviction are some. The Dow Jones Industrial Average closed down by 0.32% to 17,773.64. The Nasdaq closed down by 0.62% to 4,775.36, and the S&P 500 (SPY) closed down by 0.51% to 2,065.30. Despite many hardships, the Dow Jones Industrial Average made it out with a third straight monthly gain.

Nasdaq Down The Most

Between all the indices, the Nasdaq closed down by a higher percentage. The main driver for pushing it down lower was weakness in the healthcare sector. That weakness can be attributed to Gilead Sciences (GILD) posting lower than expected earnings. It posted numbers which fell below expectations on both the top and bottom line. The company stated that the reason for the drop in earnings was discounts on its Harvoni Hepatitis C drug product and a weak U.S economy. The latter being the more important point as to why the major indices were lagging. What does Gilead going down have to do with the Nasdaq itself? Gilead falling on earnings put added pressure on biotechnology stocks, because it is a pharmaceutical company. Not all, but a majority of biotechnology companies trade on the Nasdaq. Thus, the Nasdaq edging lower could have been attributed to biotech stocks sinking.To make the point, a biotechnolog index known as the IBB which tracks a group of biotechnology stocks, closed lower by 2.66%.

Weak Economic Data

U.S. economic data that was reported on Friday wasn’t all that great either. That could have also weighed heavily on the indices. Data for March showed that personal income was up by 0.4%, but spending only climbed by 0.1%. There are two problems with this data. One, is that it fell below expectations. The forecast was for personal income to rise by 0.3%, and spending to rise by 0.2%. Second this just shows how weak the U.S. economy really is, because no spending is taking place. Even with personal income rising, people were still not spending as much. Other disappointing data was the personalconsumption expenditures — PCE — which is one of the many tools the Fed uses to track inflation. PCE, ex food and energy, gained 0.1% on month to month basis, and 1.6% year over year. This was a decline from the prior metric being 1.7% year over year in the prior month. The lower rate of inflation signifies that the Fed is less likely to raise interest rates this coming June or July. The only possible way the Fed would change its mind in raising rates is if Q2 data comes out much better than what is expected.

Bank Of Japan Is Empty Handed

Finally, markets may had been weighed heavily from Thursday’s inaction by the Bank of Japan — BOJ. The BOJ stated that they would not perform any changes on their current policy. It maintained that it would keep its asset purchase program the same, and keeping the 0.1% negative interest rate. The Yen surged to 106.92 per dollar which had been the highest level since 2014. The truth is that the Japanese economy, which is the third-largest in the world, is slowing in growth. It also has trouble with deflation occurring as well. Typically the U.S dollar going down, has a positive effect of boosting stocks highert. However, with Japan’s economy continuing to weaken it brings about a notion that global growth is not headed in the right direction that it should be. Thus, the negative impact this event had on U.S. indices on Friday isn’t surprising. To see the Dow Jones and other indices recover, global growth needs to improve over time.Otherwise, key technical levels on the lower end of each indices, should be monitored closely.