Stocks were up modestly in choppy trade Friday morning as investors looked to close out a volatile, holiday-shortened week that has the tech-heavy Nasdaq Composite on track for its biggest weekly loss since the height of the pandemic-induced market selloff in March on a positive note.
The Dow Jones Industrial Average DJIA, +0.97% rose 169.50 points, or 0.6%, to 27,704.08, while the S&P 500 SPX, +0.76% gained 12.72 points, or 0.4%, to trade at 3,351.91. The Nasdaq Composite Index COMP, +0.67% was up 22.71 points, or 0.2%, at 10,942.30. 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?
A decline in the S&P 500 index for the week 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.”
Stocks were unable to follow through Thursday on a Wednesday bounce that saw equities recover somewhat from a three-day, tech-led rout that pushed the Nasdaq into correction territory, falling more than 10% from its record close set last week.
Weakness 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, +0.15% and Netflix Inc. NFLX, +1.73% were on track for weekly declines of more than 6%, while Facebook Inc. FB, +0.64% is off more than 5%.
“Market volatility ticked higher in the early part of the week — and while it has ebbed to some extent, we continue to see buyers exhibit patience,” said Yousef Abbasi, global market strategist at StoneX, in a note.
“Thursday’s trading activity seems to suggest that market participants would remain cautious at the current levels and considering the current dynamics/risks,” he said.
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, +2.87% were up 3.4% after the database software company late Thursday reported fiscal second-quarter results and an outlook that exceeded Wall Street estimates.
- Peloton Interactive Inc. PTON, +1.10% shares rose 3,2% after reporting late Thursday its first quarterly profit as a public company alongside record revenue.
What are other markets doing?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.675% fell 0.7 basis point to 0.676%. Bond prices move inversely to yields.
The ICE U.S. Dollar Index DXY, -0.03%, which tracks the performance of the greenback against its major rivals, fell 0.1%.
Gold futures GCZ20, -0.31% were off 0.4% at $1,956.60 an ounce, threatening to snap a three-day winning streak. The U.S. crude oil benchmark CL.1, +1.20% fell 3 cents, or 0.1%, to $37.27 a barrel.
The Stoxx Europe 600 index SXXP, +0.16% was hovering near unchanged, while the U.K.’s benchmark FTSE UKX, -0.26% rose 0.2%. 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%.
Originally published on MarketWatch