Benchmarks closed in the red on Friday as investors continued to dump technology shares for the third straight day. Uncertainties revolving around a fresh round of fiscal stimulus, dull economic recovery, and geopolitical tensions pushed major indexes to post a third straight weekly decline.
The Dow Jones Industrial Average (DJI) slid 244.56 points or 0.9%, to close at 27,657.42 and the S&P 500 fell 37.54 points, or 1.1% to close at 3,319.47. The Nasdaq Composite Index closed at 10,793.28, shedding 116.99 points, 1.1%. The fear-gauge CBOE Volatility Index (VIX) decreased 2.4%, to close at 25.83. Declining issues outnumbered advancing ones for 2.02-to-1 ratio on the NYSE and a 1.12-to-1 ratio on the Nasdaq favored decliners.
How Did the Benchmarks Perform?
On Friday, investors continue to dump tech stocks and shares of Microsoft Corporation MSFT, Alphabet Inc. GOOGL and Facebook, Inc. FB dipped 1.2%, 2.4% and 0.9%. Facebook and Amazon.com, Inc. AMZN e each dropped more than 5% this week. The decline in technology stocks have now put the Nasdaq to slid 8.3% so far this month.
Shares of Apple Inc. AAPL dropped 3.2% on Friday, the tech-giant plunged 22.6% from its intraday record high of $137.98 on Sep 2, losing around $532 billion in market value. Apple carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
All the 11 major sectors of the S&P 500 closed in the red with the real estate, utilities, materials and technology sectors closing more than 1.5% lower for the day. The S&P 500 hit its lowest level for September on Friday after reaching an all-time high on Sep 2. In fact, the session’s decline puts the broader index to close below its 50-day moving average of 3,343.42, for the first time since Apr 23.
On Friday, the S&P 500 posted 13 new 52-week highs and no new lows, while the Nasdaq Composite recorded 67 new highs and 26 new lows.
Fresh Fiscal Stimulus on Hold
The U.S House of Representatives continues to struggle to agree on how much aid needs to be provided in a follow-up bill to the previous $2 trillion package. Lawmakers planned to introduce a bill on Friday that would fund the U.S. government through mid-December but House Speaker Nancy Pelosi said that the airlines and restaurant industries both need help, and that they need another big stimulus package. Pelosi added that the Democrats could push for more than their previous offer of $2.2 trillion but the house is not willing to advocate for anything less than that.
Chinese App Ban Aggravates Tensions
On Friday, the U.S. Commerce Department announced that country will ban the use of the Chinese application WeChat and TikTok on Sunday citing national security concerns. Commerce Secretary Wilbur Ross said that access to these applications may be possible if certain safeguards are in place and the use of that platform will be banned in America by Nov 12. Though the orders do not mention anything regarding Oracle Corporation ORCL deal with TikTok, aggravation in the U.S-China front clouds investors’ sentiments. Shares of Oracle closed 0.7% lower for the session.
Consumer Sentiments Lift in September
On Sep 18, the University of Michigan reported that its preliminary reading of the U.S. consumer sentiment index came in at 78.9 for September. The reading beat the consensus estimate of 74.9 and is well above the previous month’s figure of 74.1. The index has hit its best level since March this year, however, it remains well below its February reading that was higher than 100.
For the week, the Dow closed less than 0.1% lower, while the S&P 500 and the Nasdaq slid 0.7% and 0.6% respectively. Benchmarks notched a third straight weekly loss amid broad decline in big-tech, uncertainties of a fresh round of fiscal stimulus and tensions between the U.S. and China. Overall investors remained concerned about the sluggish pace of economic recovery from the coronavirus pandemic.
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