Stocks slip on Friday, but still on track for weekly gain
Wall Street closed out the market’s best week in eight months Friday with a broad slide as technology and health care stocks gave back some of their recent gains.
The pullback, which followed a sell-off in markets around the world, snapped a four-day winning streak for the major U.S. stock indexes. Even so, the benchmark S&P 500 notched its biggest weekly gain since June.
Stocks rallied strongly for most of the week, erasing all their earlier losses from worries about the severity of the economic fallout from a new virus from China that’s rapidly spreading.
Stronger-than-expected reports on corporate profits and the U.S. economy helped assuage the fears, as did increasing hope that central banks and governments around the world can support markets with rate cuts and stimulus.
But with health experts still unsure about how far the virus will spread, how deadly it may be and how much damage it will ultimately cause the global economy, many investors opted to sell Friday to lock in some of their recent gains in case there are potential negative headlines about the outbreak over the weekend.
“The market is trying to digest all of this going into the weekend after a pretty volatile past
couple of weeks,” said Ben Phillips, chief investment officer at Eventshares. “This is just a little profit-taking because there are still these risks out there and it’s unclear if this coronavirus really does drive a broader global market slowdown.”
The S&P 500 fell 18.07 points, or 0.5%, to 3,327.71. That trims its gain for the week to 3.2%, which is still its best performance since June. The Dow Jones Industrial Average dropped 277.26 points, or 0.9%, to 29,102.51. The Nasdaq slid 51.64 points, or 0.5%, to 9,520.51.
Smaller company stocks bore the brunt of the selling. The Russell 2000 index lost 20.68 points, or 1.2%, to 1,656.78. Stocks markets in Europe and Asia also closed lower.
Uncertainty over the outbreak overshadowed the latest encouraging data point on the U.S. economy. A government report Friday showed that many more jobs were created in January than economists expected. Employers added 225,000 last month, comfortably above forecasts for 161,500 and December’s pace of 147,000.
Economic reports from outside the United States, meanwhile, were more discouraging and helped lead markets lower before trading opened in New York.
In a sign of the market’s caution, Treasury yields fell as prices for ultra-safe U.S. government bonds rose. The yield on the 10-year Treasury dropped to 1.58% from 1.64% late Thursday.
The encouraging U.S. jobs report notwithstanding, the big wild card for the economy is how much damage the outbreak of a virus spreading from China will do.