Stocks claw back some of their losses in another rocky day
The stock market closed out its worst week in more than two months Friday as a second straight day of turbulent trading ended with more losses.
The S&P 500 fell 0.8%, although the index did claw most of the way back from a 3.1% skid earlier in the day. A slide in technology stocks again did much of the damage.
The two-day sell-off came after the S&P 500 set new highs earlier in the week and had its best day in nearly two months. There wasn’t a particular catalyst for continued selling in the highflying tech sector, but analysts noted that those stocks had posted gigantic gains so far this year that many thought were overdone.
The selling followed a Labor Department report showing that U.S. hiring slowed to 1.4 million last month, the fewest jobs added since the economy started bouncing back from the initial shock of the pandemic, even as the nation’s unemployment rate improved to 8.4% from 10.2%. The U.S. economy has recovered about half the 22 million jobs lost to the pandemic.
The S&P 500 fell 28.10 points to 3,426.96. The Dow Jones industrial average lost 159.42 points, or 0.6%, to 28,133.31. The index had swung sharply during the day, between a loss of as much as 628 points and a gain of as much as 247.
The technology-heavy Nasdaq dropped 144.97 points, or 1.3%, to 11,313.13. The slide added to the index’s 5% skid from the day before.
The VIX, a gauge of how much volatility investors expect in the market, has been rising. Even so, traders were not shifting funds into traditional safe-haven assets like U.S. government bonds and precious metals, a sign that the sell-off was not necessarily a reaction to jitters about the economy.
The 10-year Treasury yield rose to 0.72%, up from 0.62% late Thursday, a big move. The higher yields helped send financial stocks higher, since banks can lend money at higher rates once yields rise in the bond market. Capital One Financial rose 4.7%
Thursday’s sell-off followed a euphoric rise in recent weeks led by big technology stocks. Investors have been betting technology companies will keep making huge profits as people spend even more time online with their devices during the pandemic, making new market darlings of companies like Zoom Video Communications as many Americans work remotely and students do online learning.
Some of the tech high fliers racked up more losses Friday. Nvidia fell 3%, though the chipmaker is still up more than twofold this year.
Apple was down for much of the day before ending with a 0.1% gain, Amazon dropped 2.2% and Zoom fell 3%. And yet, Apple is still up 64.8% this year, while Amazon is up 78.3%. And Zoom is up more than 443% for the year. Even with this week’s pullback, technology is up 28.8% this year, well ahead of the S&P 500’s 10 other sectors.
Despite this week’s stumble, the S&P 500 is up 6.1% for the year following a five-month comeback from its lows in the spring. The Nasdaq, meanwhile, is up 26.1% for the year. The market’s turnaround has been driven by low interest rates, massive amounts of spending on bond purchases by the Federal Reserve and other central banks, and encouraging economic trends as businesses have begun to reopen.
Many investors are also betting that a coronavirus vaccine will arrive later this year and clear the way for a recovery for the economy and corporate profits. Hopes also remain that Congress and the White House will come up with another economic relief package.
Stock indexes in Europe fell, shedding early gains. Markets in China also closed broadly lower.
U.S. markets will be closed Monday for Labor Day.
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