US stocks slide as wait for Congress goes on
Wall Street capped a solid week of gains on a down note Friday as the wait drags on to see if Congress can reach a deal to send more cash to struggling workers and businesses.
The S&P 500 fell 0.4%, a day after it and other major indexes returned to record heights. The decline snapped a three- day winning streak for the benchmark index, but it still notched a 1.3% weekly gain that more than made up its prior week’s loss.
Hope that Congress may be nearing a deal to offer more financial support for the economy has helped stocks set more record highs. The S& P clocked its 31st all-time high this year on Thursday. Enthusiasm about vaccines for COVID-19, which investors hope will get the economy
back on the road to normalcy next year, has also fueled traders’ optimism.
Friday’s selling came on a particularly busy day on Wall Street. Index funds were expected to snap up more than $80 billion worth of shares in Tesla as they moved to rebalance their holdings for the quarter ahead of the electric car maker’s entry
into the S& P 500, effective Monday. In addition, Friday was also quadruple witching day, Wall Street- speak for the quarterly expiration of stock options and futures contracts, which forces traders to tie up loose ends in contracts they hold, leading to particularly heavy trading volume.
“This is an unusual day because we have Tesla entering the S&P and it’s quadruple witching day,” said Andrew Slimmon, portfolio manager at Morgan Stanley Investment Management.
The S& P 500 index fell 13.07 points to 3,709.41. The Dow Jones Industrial Average lost 124.32 points, or 0.4%, to 30,179.05. The Nasdaq composite gave up 9.11 points, or 0.1%, to 12,755.64. The Russell 2000 dropped 8.06 points, or 0.4%, to 1,969.99.
Some 57% of the companies in the S&P 500 closed lower. Technology stocks, banks and companies that rely on consumer spending accounted for a big slice of the decline. They outweighed gains by household goods makers and materials stocks, among others.
Much of the market’s focus recently has been on Capitol Hill, where momentum has kicked back up for on-and-off-again talks for financial aid for the economy.