A tumultuous week on Wall Street, caused mostly by a plummet in tech stocks, ended with mixed results.
MANHATTAN (CN) — After a roller-coaster week of massive peaks and dismal trenches, Wall Street finished Friday with a smaller tumble.
The Nasdaq in particular has had a rough go over the past few days, posting one of its worst weeks since the early spring despite no trading occurring on Monday. By the closing bell on Friday, the Nasdaq dropped 0.6%.
The S&P 500, which showed early gains, remained flat by the end of trading. The Dow Jones Industrial Average, though falling into negative territory an hour before the closing bell, managed to gain 130 points, a 0.47% increase for the day.
Friday’s trading marked an anticlimactic end to a crazy week. On Tuesday after the Labor Day holiday, markets continued the sell-off among Big Tech companies that had begun the previous week. Some experts blamed President Trump’s increasingly caustic rhetoric on China and the need to “decouple” from that nation’s economy for the slide.
On Wednesday, however, markets bounced back as Big Tech shares regained much of what they had lost. Those gains were pared back once again on Thursday.
“There is so much noise in financial markets at this moment that perhaps we should expect more days like the ones we have seen so far this week, as the vicious circle of events weigh down broader markets,” wrote Stephen Innes, chief market strategist at Axi Trader.
He added that, “with tech shares falling four of the past five days, it suggests that investors are finally beginning to worry that lofty valuations have gotten too far over their skis.”
The rocky road on which technology shares have ridden the last week may portend a shakier fall for Wall Street, some say.
“The hallmark traits of a healthy market are CLOSING on their highs, often as a session begins weak,” wrote Douglas Busch, founder of Chartsmarter, which analyzes technology stocks. “The opposite of that action could be the definition of how the benchmarks fared Thursday. …
“Even with the ‘historic’ correction” earlier this week, it would be hard to say that a new possible uptrend was ready to emerge,” Busch added. “Perhaps, for the first time in a while, we can say advantage bears.”
Overall, the week was fairly quiet for economic indicators.
Consumer prices also showed an increase for the third month in a row. According to the Bureau of Labor Statistics, consumer prices gained 0.4% last month after increasing 0.6% in July. The biggest gains were among used cars and trucks — the biggest increase in that category for more than 50 years — accounting for 40% of the total increase in August.
But some specific indices gained less than in July. Gasoline prices rose 2% in August after a 5.6% increase the prior month, while new-vehicle prices flattened after a 0.8% increase in July. The only declines predictably seen among some utilities, food away from home, and personal care as social-distancing restrictions persist.
As lower-wage workers reenter the workforce, causing average incomes to decelerate and to return to where they were before the pandemic, however, some say the rise in prices isn’t all good news.
“Inflation really matters when it starts restraining household spending power significantly,” wrote market consultant Joel Naroff. “For consumers to buy more, their incomes have to rise faster than inflation. In August, that didn’t happen.”
Small-business optimism, which sometimes tracks with consumer confidence, also gained last month. The index, put out by the National Federation of Independent Business, saw a 1.4-point increase in August. The index is still more than four points lower than the year’s high point from February.
The index found marginal increases among job openings, which gained 3 points, and optimism for expansion, which increased 1 point. Real sales expectations for the next three months meanwhile fell two points.
“Small businesses are working hard to recover from the state shutdowns and effects of Covid-19,” NFIB Chief Economist Bill Dunkelberg said in a statement. He noted that “many small businesses are still struggling and are uncertain about what the future will hold.”
Earlier in the week, lukewarm unemployment numbers failed to spur any movement either way in the markets. States reported about 857,000 new claims for the week ending September 5, according to Labor Department figures. All told, nearly 30 million Americans are receiving jobless benefits.
Perhaps somewhat troubling was that the number of those receiving pandemic unemployment assistance — such as freelancers and contractors not usually covered under state unemployment programs — increased for the fourth-straight week. About 840,000 workers received benefits under that new program as of last week.
Talk of a potential stimulus package also has had little effect on markets after a Republican proposal fizzled in the Senate. The $650 billion proposal would have extended unemployment benefits by $300 a week, offered new loans under the Paycheck Protection Program, and given funding only to schools that had fully reopened; it failed 52-47 to advance.
Senate Majority Leader Mitch McConnell said Democrats have used myriad excuses to avoid passing the bill, while Democratic senators criticized the bill as inadequate and lacking key protections, such as funding to states and localities and a boost in food stamps.
Next week, investors will be focused on the Federal Reserve’s quarterly meeting, scheduled for Wednesday, as well as a number of regional manufacturing and business indexes. Several database and software companies are poised to make initial public offerings next week, which could provide a needed goose for Big Tech.
Markets will also remain cognizant of the rising toll of the coronavirus, which some experts warn could again peak in the fall as weather gets colder and schools reopen.
According to data compiled by Johns Hopkins University, more than 28 million have contracted Covid-19 worldwide, while roughly 911,000 have died. In the United States alone, 6.4 million have been confirmed infected while more than 192,000 have died.