Wall Street capped another turbulent week of trading on Friday with a broad decline in stocks that left the S&P 500 with its third consecutive weekly loss.
The S&P 500 fell 1.1%, led once again by a sell-off from tech companies, with Apple, Amazon and Alphabet particularly weighing on the market. Tech stocks and other companies that fueled the market’s strong rally this year suddenly lost momentum this month on fears they may have become too expensive.
The sell-off wiped out the last of the strong gains the market saw at the start of the week. The S&P 500 is on track for its first monthly loss since March. September is historically the worst month for stocks.
The S&P 500 fell 37.54 points to 3,319.47. The drop marks the first three-week losing streak for the benchmark since last October. The Dow Jones industrial average fell 244.56 points, or 0.9%, to 27,657.42. The Nasdaq composite lost an early gain, losing 116.99 points, or 1.1%, to 10,793.28. Small stocks also fell, with the Russell 2000 Index of small cap stocks dropping 5.82 points, or 0.4%, to 1,536.78.
Market momentum changed on Wednesday after the Federal Reserve said the outlook for the U.S. economy remains uncertain and policymakers expect short-term interest rates to remain at record highs until March. 2023. Low rates generally energize the market by encouraging investors to pay higher prices for stocks. , but some investors may have wished the Fed was more aggressive.
Growth in some sectors of the economy has also slowed after the expiry of additional unemployment benefits and other federal government aid, and disagreements in Congress are delaying a possible renewal of support. Investors say it is essential that such help arrives.
Growing tensions between the world’s two largest economies also continue to keep markets on edge. The United States said on Friday it would ban downloads of Chinese apps TikTok and WeChat on Sunday. He cited national security and data privacy concerns.
President Trump’s targeting of China’s tech industry has sparked intermittent market concerns over possible retaliation against the US industry.
Big tech stocks have stumbled sharply this month on fears their prices may have become too expensive after their virtuoso performances during the pandemic. Soaring shares of Apple, Microsoft, Amazon and others helped push Wall Street back to record highs even as the pandemic hit much of the economy, as the coronavirus ramped up work from home and other tendencies that benefited them.
But they suddenly lost momentum two weeks ago, causing the market to swing with them. Because these companies have grown so massively, their stock market movements have a huge influence on major stock indices, such as the S&P 500.
On Friday, several Big Tech stocks continued to slide. Apple fell 3.2%, Microsoft 1.2% and Amazon 1.8%.
Also on the long list of market concerns are the progression of the pandemic, the possibility that a COVID-19 vaccine will actually be available in early 2021, as many investors expect, and the impact of the November US presidential election on the economy.
Treasury yields remain very low, showing the mighty strength of the Federal Reserve and the lingering expectations of bond investors for modest economic growth and inflation. The 10-year Treasury yield rose to 0.70% from 0.69% on Thursday evening.
A preliminary report released on Friday indicates that consumer confidence is improving at a faster rate than economists expected, which is essential for an economy in which consumer spending is the main driver. But that follows other reports this week that showed retail sales growth slowed last month and the number of layoffs across the country remains stubbornly high.
One factor that may have contributed to making trading bumpier than usual on Friday was an event known as the “quadruple witch,” which marks the expiration of stock and index futures and options. The event may cause price fluctuations.
Other stock markets around the world made mostly modest moves.
In Europe, the German DAX lost 0.7% and the French CAC 40 fell 1.2%. The FTSE 100 in London fell 0.7%. Asian markets mostly closed higher.
Benchmark U.S. crude fell 0.2% to $40.89 a barrel. Brent, the international standard, fell 0.8% to $42.95 a barrel.