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Tech slide pulls S&P 500 down; investors weigh the economy’s trajectory

A woman wipes tears from her face. In the background, a row of solemn people stand at the New York Stock Exchange.
New York Stock Exchange traders, including Phyllis Arena Woods, right, gather in remembrance on the eve of the anniversary of the Sept. 11 terrorist attacks.
(Courtney Crow / New York Stock Exchange)

Wall Street capped a choppy day of trading Friday with another pullback for stocks and the Standard & Poor 500’s first weekly loss in three weeks.

The benchmark index fell 0.8%, its fifth straight decline, and ended 1.7% lower for the holiday-shortened week. That’s its biggest weekly drop since June. The other major U.S. stock indexes also posted weekly losses.

The selling was widespread, though technology, healthcare and communications stocks weighed most heavily on the S&P 500. Smaller-company stocks also fell broadly. Treasury yields mostly rose. The price of U.S. crude oil rose 2.3%.

Stocks have traded in a narrow range for several weeks as most investors wait for a fuller understanding of where the economy is headed and how the pandemic is affecting corporations.

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“There isn’t any new good news coming, and that’s important because we’ve gotten a decent amount of good news that has flowed up until this point this year,” said Liz Young, head of investment strategy at personal finance company SoFi.

The S&P 500 fell 34.70 points to 4,458.58. The index is now within 1.8% of the all-time high it set last week. The Dow Jones industrial average lost 271.66 points, or 0.8%, closing at 34,607.72.

The tech-heavy Nasdaq composite shed an early gain, dropping 132.76 points, or 0.9%, to 15,115.49.

The Russell 2000 index of smaller companies gave up 21.58 points, or 1%, to end at 2,227.55.

Investors mulled over a negative piece of inflation data Friday. Inflation at the wholesale level climbed 8.3% last month from August 2020, the biggest annual gain since the Labor Department started calculating the 12-month number in 2010.

Federal Reserve policymakers have said they believe inflation this year will be temporary and is a result of the economy recovering from the pandemic. However, persistently high inflation could force the Fed to start pulling back on its bond-buying program and low interest rate policy sooner than anticipated.

The bond market had a mild reaction to the inflation data, a possible sign that investors continue to agree with the Fed’s outlook. The yield on the 10-year Treasury note rose to 1.33% from 1.30%.

The pandemic remains in the forefront of investors’ minds, as hospitals fill up in the South and other parts of the country. President Biden announced Thursday that companies with more than 100 employees would be required to have their employees vaccinated or do weekly testing, an announcement big companies have been willing to embrace.

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“A lot of the pain was felt in August and that’s part of why September is going to be so choppy,” Young said. “I’m hopeful that some of the worst of that is behind us and we can move forward.”

Industries that have been hit hardest through the pandemic and are relying on a steady recovery have been struggling as COVID-19 cases rise with the highly contagious Delta variant.

Travel-related companies were among the decliners Friday. American Airlines slid 6.2% and Delta Air Lines lost 4.2%, while cruise line operator Carnival fell 2.3% and Norwegian Cruise Line dropped 1.4%.

Apple fell 3.3% after a federal judge ordered the iPhone maker to dismantle part of the competitive barricade guarding its closely run app store, which is one of its biggest moneymakers.

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