Stock market today: Dow falls again as Invesco surges and China Tech soars
Stocks fell on Friday as investors rated the newly released economic data better than expected against weaker economic support from the Federal Reserve.
Friday’s close continued a recent pullback in major US indices, which was in part attributable to companies that released weaker earnings forecasts.
Dow Jones Industrial Average
lost 166 points, or 0.5%. The index slipped 63 points on Thursday to close at 34,751.
each fell 0.9%.
The S&P 500 is down 2.3% from its all-time high of September 2. Many companies have lowered their quarterly profit estimates because they cannot access the supplies needed to meet demand. As a result, companies incur higher costs, threatening their profit margins. US retail sales on Thursday beat expectations, a positive development, but also one that could make it more likely that the Federal Reserve will cut its bond purchases at a faster pace.
The speed of this program is important: the Fed will likely reduce its buying program to zero at $ 80 billion per month within a few quarters. As the Fed “cuts” its purchases to zero, bond prices could drop and their yields could rise. This makes future earnings less valuable and would be bad news for stock prices.
“Without the injection of the Fed’s purchases, several quarters later, that only means a market that will have higher rates,” said Kevin Simpson, founder and portfolio manager at Capital Wealth Planning. The speed of the Fed’s tapering “is the only unknown,” says Simpson.
The yield on the 10-year Treasury bill was 1.38%. In the coming days, “the liquidation of the bond market could gain new momentum,” wrote Edward Moya, senior market analyst at Oanda. “Investors expect Fed Chairman Powell to implement a cut in November.”
Investors are also paying close attention to when the Fed hikes short-term interest rates in response to inflation. The yield on the 2-year Treasury bill was 0.23%.
Overall, a certain indecision seems to prevail in the market. The S&P 500 remained largely on a bullish path in the second half of the year, wrote Fiona Cincotta, senior financial markets analyst at City Index. But for now, the index is unlikely to break above its all-time high of 4,536 until it rises about 1.3% above its closing level on Friday.
In the 13-day trading day period ended Thursday, there were only two days in which 70% or more of the S&P 500 shares rose, according to Instinet data, compared to six days of a such magnitude during the previous 13 trading days. Only 24% of stocks in the index rose on Friday, according to FactSet.
Still, the index is trading at a level that doesn’t suggest a big correction has necessarily started, Cincotta said.
When the Fed holds its monetary policy meeting next week, most Wall Street people don’t expect the central bank to make a formal spending cut announcement. Fed members likely need to see the September wage report, released in October, before deciding the economy is ready for less stimulus, Simpson says.
Overseas, Hong Kong
Hang Seng Index
rose 1% as Chinese tech stocks surged, with the
Hang Seng Technology Index
up 3.5% for one of its best days last month. The pan-European
was 0.9% lower.
Oil futures posted a slight gain. International Brent oil benchmark futures rose 0.1% to exceed $ 75 a barrel.
These 14 stocks were in motion on Friday:
Invesco (ticker: IVZ) Shares jumped 5.5% after the Wall Street Journal reported that the exchange-traded fund giant was in merger talks with
State Streetthe asset management activity of.
Chinese tech giants have made great strides in Hong Kong, with
Ali Baba (BABA) up 2.2%,
Tencent (0700.HK) 2.4%,
Baidu (9888.HK) 2.4%, and
JD.com (9618.HK) 4.6%.
European travel stocks have been bolstered by reports the UK is drastically relaxing travel rules linked to the Covid-19 pandemic. owner of British Airways
AGI (IAG.UK) climbed 4.9% as
InterContinental Hotels Group (IHG.UK) rose 2%.
Commercial bank (CBK.Germany) rose 1.2%, after local German media reported that US private equity group Cerberus was considering taking a larger stake in the bank after the German election later this month .
Evergrande (3333.HK) fell 3.4% as the struggling and heavily indebted Chinese real estate giant remains threatened with restructuring.
Diamondback Energy (FANG) gained 3.2% after the oil producer announced a stock buyback plan that could reach $ 2 billion.
Sands of Las Vegas The stock (LVS) initially fell, but ended up 1.7% after being demoted to Hold d’Abeter at Jefferies. Potential Chinese casino business regulation beat the stock this week.
Wynn Resorts (WYNN) fell 1.3% on Friday as losses started to moderate. The stock has fallen 18% this week.
Lincoln National (LNC) rose 1.4% after the company announced a $ 9.4 billion reinsurance deal with a division of Denver Insurance Company.
O’Reilly Automotive The stock (ORLY) fell 1.2% after being demoted to Neutral to Buy at Bank of America.