Stocks traded lower Friday afternoon, dimming hopes for Wall Street to close out a volatile, holiday-shortened week on a positive note. The Nasdaq Composite is on track for its biggest weekly loss since the market slump in March when the coronavirus pandemic hit.
How are major benchmarks trading?
The Dow Jones Industrial Average DJIA, -0.12% wavered between positive and negative territory and was most recently off 43 points, or 0.2%, at about 27,495; while the S&P 500 SPX, -0.60% fell 23 points, or 0.7%, to trade around 3,315. The Nasdaq Composite Index COMP, -1.37% was 168 points lower, or 1.5%, near 10,750. The Nasdaq briefly dipped into negative territory in early action before bouncing back.
The Dow on Thursday fell 405.89 points, or 1.5%, to close at 27,534.58, while the S&P 500 ended with a loss of 59.77 points, or 1.8%, at 3,339.19. The Nasdaq Composite fell 221.97 points, or 2%, to finish at 10,919.59. Through Thursday, the Dow was down 2.1% for the week, while the S&P 500 was off 2.6% and the Nasdaq was 3.5% lower; markets were closed Monday for Labor Day.
What’s driving the market?
Markets don’t like uncertainty, but that’s probably what’s in store over the next few months, particularly if recent Wall Street jitters over technology-led gains deepen.
“A longer-lasting correction cannot be ruled out,” said Frédérique Carrier, head of investment strategy at RBC Wealth Management, in a Friday note, pointing to the Nasdaq’s rapid 10% fall into correction territory from a record close in September that “barely dents its recent outperformance.”
“Investors should brace for more choppiness in the months ahead, with COVID-19 infection rates remaining in the headlines, U.S. elections approaching, U.S.-China tensions ratcheting up, and Brexit challenges lingering,” he said.
The looming decline in the S&P 500 index for the week also would mark the benchmark’s first back-to-back weekly drop since May.
“While monetary policy is set to remain supportive for several more quarters, valuations are high across assets and volatility is resurfacing,” said Elia Lattuga, co-head of strategy research at UniCredit Bank, in a note. “The breadth of the rally is still limited and the recovery uneven—hence developments in the economic outlook and political risks represent significant threats to risk appetite.”
Weakness in the benchmark indexes on Thursday was partly tied to the inability of U.S. politicians to agree on a new coronavirus rescue package after Democrats blocked a Republican bill on the Senate floor, leaving the way forward unclear, analysts said.
Meanwhile, investors have fretted that the sharp rally that took stocks from their March pandemic lows to new all-time highs had left valuations significantly stretched for the large-cap, tech-related stocks that had led the rally this year. Among those highfliers, shares of Apple Inc. AAPL, -2.51% and Netflix Inc. NFLX, -0.05% were on track for weekly declines of more than 6%, while Facebook Inc. FB, -1.23% is off more than 5%.
In U.S. economic news, the consumer-price index for August rose 0.4% last month, beating average economists’ estimates for a rise of 0.3% but falling below the past two months at 0.6%. On a year-over-year basis, the CPI increased 1.3% after gaining 1.0% in July, the Labor Department said on Friday
Looking ahead, Federal budget figures for August are due at 2 p.m. Eastern.
Which companies are in focus?
- Shares of Oracle Corp. ORCL, -0.52% were up 3.2% after the database software company late Thursday reported fiscal second-quarter results and an outlook that exceeded Wall Street estimates.
- Peloton Interactive Inc. PTON, -1.82% shares rose 1.7% after reporting late Thursday its first quarterly profit as a public company alongside record revenue.
- Unity Software Inc.estimated that it will sell shares in its coming public offering for a price of $34 to $42 apiece, according to an SEC filing Wednesday.
- Nikola Inc. NKLA, -15.35% shares were down 16%, a day after short seller Hindenburg Research published a report on electric-truck maker, accusing it of perpetrating an “intricate fraud” built on lies told by Trevor Milton, its founder over many years.
What are other markets doing?
The ICE U.S. Dollar Index DXY, +0.01%, which tracks the performance of the greenback against its major rivals, was flat.
Gold futures GCZ20, -0.77% traded 0.7% lower, near $1,950.90 an ounce, threatening to snap a three-day winning streak but on track for a weekly rise. The U.S. crude oil benchmark CL.1, +0.05% gained 0.6%, trading near $37.52 a barrel, but were heading for a second weekly fall blamed on rising worries over the outlook for demand.
The Stoxx Europe 600 index SXXP, +0.13% was up 0.1%, while the U.K.’s benchmark FTSE UKX, +0.23% rose 0.5%. In Asia, Hong Kong’s Hang Seng Index HSI, +0.78% and the Shanghai Composite Index SHCOMP, +0.78% both rose 0.8%, while Japan’s Nikkei NIK, +0.73% rose 0.7%.