New York, Sept. 18 (BUS): Wall Street capped a week of ups and downs of trading on Friday with a broad sell-off that wiped out the major indexes’ gains for the week.
The S&P 500 lost 0.9% and posted its second consecutive weekly loss. Almost 80% of stocks in the benchmark index fell. Technology and telecom companies accounted for a lot of the decline. Industrial and financial stocks also constituted major obstacles to the index. Only the healthcare sector in the index managed to gain.
Small-cap stocks bucked the general market slide. Bond yields rose broadly. The Associated Press (AP) reported that energy prices fell.
Trading was choppy throughout the week as investors weighed a mixed batch of economic data reflecting how the economy is facing a spike in COVID-19 cases and how it could continue its recovery in the coming months. Wall Street is also looking ahead to next Wednesday, when the Federal Reserve is set to provide its latest economic and interest rate policy update.
“We have seen a gradual deterioration over the course of the week, with two small, but mostly weak (equity) market periods overall,” said Alan McKnight, chief investment officer at Asset Management.
The S&P 500 fell 40.76 points to 4,432.99. Although down about 0.6% for the week, the index is within 2.3% of its September 2 high.
The Dow Jones Industrial Average fell 166.44 points, or 0.5%, to 34584.88, while the tech-heavy Nasdaq Composite fell 137.96 points, or 0.9%, to 15043.97.
The Russell 2000 index of smaller companies recovered from an early slide and rose 3.96 points, or 0.2%, to 2,236.87.
Bond yields rose. The yield on the 10-year Treasury rose to 1.38% from 1.33% late Thursday.
Technology and telecoms stocks were the biggest market weights. Apple shares fell 1.8 percent and Facebook 2.2 percent.
Oil prices fell 0.9% and natural gas prices decreased 4.3%. Weak energy prices helped reduce energy stocks. Oilfield services company Schlumberger fell 1.9 percent.
Healthcare stocks consolidated gains. Laboratory equipment maker Thermo Fisher Scientific jumped 6.5% after giving investors an encouraging business update. Some travel-related stocks posted strong gains. Cruise line operator Carnival is up 2%, while Norwegian Cruise is up 2.1%.
The effect of the “magic quadruple” on market volatility was the simultaneous expiration of four types of options and futures contracts. This phenomenon occurs four times a year and forces traders to tie up the contracts they own. McKnight said more than 750 billion individual stock options were due to mature on Friday.
“The sheer scale of that plays a role in this,” he said. “It creates more volume in the market and some of the volatility associated with that.”
A lot of economic data this week indicated that the economy has been struggling to move forward in the past few months. Inflation remains a concern for companies that deal with supply chain problems and face higher costs. Concerns about the highly contagious delta variable have also made analysts wary of stalling consumer spending, a key part of economic growth.
Investors will be watching the Fed next week to see if the central bank takes any action to address the impact of higher prices on businesses and consumers. The Fed said higher costs for raw materials and consumer goods are likely to remain temporary as the economy recovers, but analysts are concerned that higher prices may hold and affect corporate bottom lines while also reducing spending.
NS