Wall St falls after roller coaster week
US stocks have been rocked by mixed economic data throughout this week and investors are now focused on the results of a Fed policy meeting
U.S. stocks ended sharply lower on Friday, ending a week shaken by strong economic data, concerns about rising corporate taxes, the Delta variant of SARS-CoV-2 and possible changes in the US Federal Reserve schedule for reducing asset purchases.
All three major US stock indices lost ground, with the NASDAQ Composite Index rising as rising US Treasury yields put pressure on market-leading growth stocks.
They also posted weekly losses, with the S&P index suffering its biggest drop in two weeks since February.
“The market is grappling with the outlook for tighter fiscal policy due to tax increases and tighter monetary policy due to the Fed’s cut,” said David Carter, chief investment officer at Lenox Wealth Advisors Inc in New York.
“Stock markets are also a little weaker due to weak consumer sentiment data today,” Carter added. “This raises concerns that the Delta variant may slow economic growth.”
A potential corporate tax hike could also weigh on profits, with leading Democrats looking to raise the corporate tax rate to 26.5% from 21%.
While consumer sentiment has stabilized this month, it remains depressed, according to a University of Michigan report, as Americans postpone shopping as inflation remains high.
Inflation is likely to be a major issue next week, when the US Federal Open Markets Committee holds its two-day monetary policy meeting. Market participants will be watching closely for nuance changes, which could signal a shift in the Fed’s cut schedule.
“It has been a week of mixed economic data and we are clearly focused on what will come out of the Fed meeting next week,” said Bill Northey, senior director of investments at US Bank Wealth Management in Helena, Montana.
The Dow Jones Industrial Average fell 166.44 points, or 0.48%, to 34,584.88 on Friday; the S&P 500 lost 40.76 points, or 0.91%, to 4,432.99; and the NASDAQ Composite lost 137.96 points, or 0.91%, to 15,043.97.
For the week, it fell less than 0.1%, the S&P 500 lost 0.6%, and the NASDAQ lost 0.5%.
The S&P 500 finished below its 50-day moving average, which in recent history has proven to be a pretty solid support level.
Of the top 11 sectors in the S&P 500, all but healthcare finished in the red, with materials and utilities suffering the largest percentage declines.
COVID-19 vaccine makers Pfizer Inc and Moderna Inc fell 1.3% and 2.4% respectively as U.S. health officials shifted the booster dose debate to a panel of independent experts.
US Steel Corp lost 8% after unveiling a plan to invest US $ 3 billion in a mini-steel plant.
Robinhood Markets Inc rose 1% after Cathie Wood’s ARK Invest bought $ 14.7 million in shares of the trading platform.
Volume and volatility increased towards the end of the session due to the ‘triple witchcraft’, which is the quarterly and simultaneous expiration of stock options, stock index futures and contracts. ‘options on stock market indices.
Volume on the US stock exchanges was 15.51 billion shares, compared to an average of 9.70 billion over the last 20 trading days.
Falling issues outnumbered rising ones on the New York Stock Exchange by a ratio of 1.97 to 1; on the NASDAQ, a ratio of 1.00 to 1 favored advances.
The S&P 500 posted seven new 52-week highs and two new lows; the NASDAQ Composite recorded 67 new highs and 82 new lows.
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