Stock indexes were off session lows but remained under pressure Friday afternoon, with the Nasdaq Composite again bearing the brunt of the selling, following Thursday’s rout for technology and other highflying sectors.
U.S. markets on Monday will be closed in observance of Labor Day, a factor that could be adding to market volatility by sapping volume in the run-up to the long holiday weekend.
The Dow Jones Industrial Average DJIA, -1.10% DJIA, -1.10% DJIA, -1.10% fell 370 points, or 1.3%, to 27,924, after being down 628 points at its session low. The S&P 500 index SPX, -1.48% fell 58 points, or 1.7%, to 3,395, while the Nasdaq Composite Index COMP, -2.38% dropped 305 points, or 2.7%, to 11,152.
On Thursday, the Dow ended with a loss of 807.77 points, or 2.8%, at 28,292.73, after dropping more than 1,000 points at its session low. The S&P 500 closed 125.78 points lower, down 3.5%, at 3,455.06. The Nasdaq Composite tumbled 598.34 points, or 5%, to end at 11,458.10. The declines marked the biggest one-day drops for all three indexes since June.
The fall came a day after the S&P 500 claimed its 22nd record close of the year, while the tech-heavy Nasdaq Composite arrived at its 43rd such all-time high and the Dow topped the 29,000 level for the first time since February. Thursday’s fall snapped a four-day win streak for the Nasdaq and a 10-day run of gains for the S&P 500’s tech sector.
In One Chart:Tech stocks and the rest of the market are both very expensive — but for very different reasons
What’s driving the market?
“We view the latest sell-off as a bout of profit-taking after a strong run,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note.
The S&P 500 rose 7% last month for its strongest August in 34 years, then added another 2.3% in the first two days of September to hit another record high before Thursday’s selloff, he noted. “Stocks are still well-supported by a combination of Fed liquidity, attractive equity risk premiums, and an ongoing recovery as economies reopen from the lockdowns.”
Stocks remained under pressure Friday after a July jobs report that was better-than-estimated but still reflective of a slowdown in the economic recovery, after Thursday saw the worst single-day decline in U.S. equities since June.
See:‘What’s concerning is that the pace of jobs growth is slowing down’ — economists react to August jobs report
Data from the Labor Department showed that the economy regained 1.4 million jobs in August and the unemployment rate fell to 8.4% from 10.2%. Economists polled by MarketWatch had predicted an increase of 1.2 million jobs.
Private-sector payrolls rose by a smaller 1 million. Hours worked rose 0.1 hour to 34.6 hours. The increase in hiring in July was reduced slightly to 1.73 million. Job gains in June were little changed at 4.79 million.
The report showed that the gains are “slow but steady which is actually a perfect thing to see overall,” JJ Kinahan, chief market strategist for TD Ameritrade, told MarketWatch. That said, the strategist thinks investors may need to see more progress, especially given where the labor-market was in February.
“I want to see a couple more months of that before I’m shouting from the rooftops,” he said.
Mike Loewengart, managing director investment strategy at E-Trade Financial ETFC, -0.71%, said that investors could see more turbulence after Thursday’s unsettling action.
“It’s been a while since we’ve been in the throes of the type of volatility that defined the market earlier this year, so investors may have some post-traumatic stress after yesterday’s landslide,” he wrote in emailed comments on Friday.
“For some perspective, September ushers in a historically volatile period for the market, and has a particularly bearish reputation,” he wrote. “Certainly, wide price swings are never comfortable, but investors should keep in mind that periods of volatility like this are not uncommon, especially on the heels of an epic rally, and should be taken in stride,” Loewengart said.
Some investment bulls think Thursday’s downturn wasn’t indicative of a broader unraveling of the overall upbeat momentum for equities.
Peter Cardillo, chief market economist at Spartan Capital Securities, said “we don’t think yesterday’s plunge will turn into meaningful correction.”
“In other words, yesterday’s decline is likely to be short lived as rotation maybe unfolding,” he said.
Which stocks are in focus?
- Apple Inc. AAPL, -1.73% shares traded 3.1% lower after an 8% tumble for the company’s worst day since March 16, when shares plunged 12.9%.
- Athletic-apparel company Under Armour Inc. UA, -0.64% UAA, -0.09% said Friday it will close all of its UA Brand House and UA Factory House retail locations in the U.S. for Thanksgiving on Nov. 26., as a way to thank workers for their efforts during the pandemic. Under Armour shares were modestly lower.
- Shares of Tesla Inc. TSLA, -0.13% fell 1.5% Friday, with the electric-vehicle maker on track for a fourth straight decline.
How are other markets trading?
The 10-year Treasury note yield TMUBMUSD10Y, 0.705% added 8.1 basis points to 0.697% after skidding lower on Thursday. Bond prices move inversely to yields.
The ICE U.S. Dollar Index DXY, +0.05%, which tracks the performance of the greenback against its major rivals, rose 0.1%.
Gold futures GCZ20, -0.04% retreated, off 0.3% at $1,932.90 an ounce. U.S. benchmark crude futures CL.1, -3.67% tumbled 4.6% to trade below $40 a barrel.
The Stoxx Europe 600 index SXXP, -1.13% closed off 1.1%, while the U.K.’s benchmark FTSE 100 UKX, -1.04% ended 0.9% lower on Friday.
Originally published on MarketWatch