Wall Street closed mixed on Friday as technology sector meltdown continued after a highly volatile session. The Dow ended in the green while the S&P 500 managed to close in positive territory. on the other hand, the Nasdaq Composite finished in the red. For the week as a whole, Wall Street remained extremely volatile with all the three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.5% or 131.06 points to close at 27,665.64, reversing previous day's losses. Notably, 22 components of the 30-stock index ended in the green while 8 finished in red. The blue-chip index is 3.1% below to become green year to date and 6.5% below its all-time high recorded on Feb 12.
The S&P 500 was up 0.1% to end at 3,340.97, reversing previous day's losses. The Industrials Select Sector SPDR (XLI) and the Materials Select Sector SPDR (XLB) surged 1.4% and 1.3%, respectively. Notably, eight out of total eleven sectors of the benchmark index closed in positive territory and three in the red. The broad-market index is 6.9% below its all-time high recorded on Sep 2.
The Nasdaq Composite finished at 10,853.55, shedding 0.6% and marked 2-days of losing streak as selling of major technology stocks continued. The tech-laden index is 10.1% below its all-time high recorded on Sep 2.
The fear-gauge CBOE Volatility Index (VIX) was down 9.6% to 26.70. A total of 8.91 billion shares were traded on Friday, lower than the last 20-session average of 9.22 billion. Decliners outnumbered advancers on the NYSE by a 1.05-to-1 ratio. On Nasdaq, a 1.41-to-1 ratio favored declining issues.
Technology Sector Mayhem Continues
The technology sector pulled down the overall market after being the predominant driver for the impressive showing over the last five months. It was technology that had helped Wall Street to exit a coronavirus-induced short bear market and form a new bull market. However, on the due course of market's V-shaped recovery from its recent trough on Mar 23, technology stocks got overvalued, as stated by many financial experts. The technology sector has declined in five out of last six trading days.
On Sep 11, shares of tech bigwigs like Apple Inc. (AAPL - Free Report) , Amazon.com Inc. (AMZN - Free Report) , NVIDIA Corp. (NVDA - Free Report) and Advanced Micro Devices Inc. (AMD - Free Report) declined 1.3%, 1.9%, 1.2% and 3.3%, respectively. Apple carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Department of Labor reported that consumer price index (CPI) rose 0.4% in August after rising 0.6% in the previous two months. However, the consensus estimate was for a rise of 0.3%. The cost of used cars and trucks increased the most since March 1969 as American people increasingly avoided public transportations fearing contracting COVID-19. Year over year, CPI increased 1.3% in August compared with 1% in July.
The core CPI (excluding the volatile food and energy components) rose 0.4% in August after rising 0.6% in the previous two months. However, the consensus estimate was for a rise of 0.2%. Year over year, core CPI increased 1.7% in August compared with 1.6% in July.
Last week was highly disappointing for Wall Street. The Dow was down 1.7% in the last week, marking its second straight negative week. The S&P 500 lost 2.5%, reflecting its second straight weekly loss for the first time since May 1, and its worst week since Jun 26. The Nasdaq Composite tumbled 4.1%, marking its worst weekly performance since Mar 20.
Large scale selling of technology stocks owing to the concern of overvaluation, delay in new fiscal stimulus deal, heightening geopolitical tensions between the United States and China and halt in clinical trials of a leading drug for the potential treatment of COVID-19 were primary reasons for last week's market turmoil.
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