Market closes out worst week in over 2 months
Tech-heavy Nasdaq drops for 2nd straight session
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% after clawing most of the way back from a 3.1% skid earlier in the day. Another slide in technology stocks, which led the selling a day earlier, pulled the market sharply lower for much of the day, though the selling eased by late afternoon.
The two-day sell-off handed the benchmark index its first weekly loss after five weeks of gains. Earlier in the week, the S&P 500 was notching alltime highs and posting its biggest increases in nearly two months.
There wasn’t a particular catalyst for continued selling in the high-flying tech sector, but analysts noted that those stocks had posted gigantic gains so far this year that many thought were overdone.
“We had a fast and furious rally at the end of August and we’ve given it back,” said Barry Bannister, head of institutional equity strategy at Stifel. “Investors are like a herd of gazelle on the Serengeti; it doesn’t take much to spook them.”
The selling followed a Labor Department report showing that U.S. hiring slowed to 1.4 million last month, the fewest jobs since the pandemic began, even as the nation’s unemployment rate improved to 8.4% from 10.2%.
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 safehaven 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.
“A lot of people were piling into the (tech) trade and there are a lot of gains to be made,” said Stephanie Roth, portfolio macro analyst at J.P. Morgan Private Bank.
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 flyers 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%. Apple is still up 64.8% this year, while Amazon is up 78.3% and Zoom is up more than 443%. Even with this week’s pullback, technology is up 28.8% this year.