Stock indexes traded sharply lower midday Friday, with the Nasdaq Composite under intense selling pressure in a turbulent session, following Thursday’s blistering bout of selling in technology and other highflying sectors.
U.S. markets on Monday will be closed in observance of Labor Day, a factor that could be adding to market volatility by sapping volume in the run-up to the long holiday weekend.
The Dow Jones Industrial Average DJIA, -1.10% DJIA, -1.10% traded 564 points, or 2%, lower at about 27,715, near session lows. The S&P 500 index SPX, -1.53% fell 80 points, or 2.3%, to 3,375, while the Nasdaq Composite Index COMP, -2.42% traded 373 points lower, down 3.2%, at 11,092.
On Thursday, the Dow ended with a loss of 807.77 points, or 2.8%, at 28,292.73, after dropping more than 1,000 points at its session low. The S&P 500 closed 125.78 points lower, down 3.5%, at 3,455.06. The Nasdaq Composite tumbled 598.34 points, or 5%, to end at 11,458.10. The declines marked the biggest one-day drops for all three indexes since June.
The fall came a day after the S&P 500 claimed its 22nd record close of the year, while the tech-heavy Nasdaq Composite arrived at its 43rd such all-time high and the Dow topped the 29,000 level for the first time since February. Thursday’s fall snapped a four-day win streak for the Nasdaq and a 10-day run of gains for the S&P 500’s tech sector.
Stocks were under pressure after a July jobs report that was better-than-estimated but still reflective of a slowdown in the economic recovery, after Thursday saw the worst single-day decline in U.S. equities since June.
Data from the Labor Department showed that the economy regained 1.4 million jobs in August and the unemployment rate fell to 8.4% from 10.2%. Economists polled by MarketWatch had predicted an increase of 1.2 million jobs.
Private-sector payrolls rose by a smaller 1 million. Hours worked rose 0.1 hour to 34.6 hours. The increase in hiring in July was reduced slightly to 1.73 million. Job gains in June were little changed at 4.79 million.
The report showed that the gains are “slow but steady which is actually a perfect thing to see overall,” JJ Kinahan, chief market strategist for TD Ameritrade, told MarketWatch. That said, the strategist said that investors may need to see more progress, especially given where the labor-market was in February.
“I want to see a couple more months of that before I’m shouting from the rooftops,” he said.
Mike Loewengart, managing director investment strategy at E-Trade Financial ETFC, -0.53%, said that investors could see more turbulence after Thursday’s unsettling action.
“It’s been a while since we’ve been in the throes of the type of volatility that defined the market earlier this year, so investors may have some post-traumatic stress after yesterday’s landslide,” he wrote in emailed comments on Friday.
“For some perspective, September ushers in a historically volatile period for the market, and has a particularly bearish reputation,” he wrote. “Certainly, wide price swings are never comfortable, but investors should keep in mind that periods of volatility like this are not uncommon, especially on the heels of an epic rally, and should be taken in stride,” Loewengart said.
Some investment bulls believe that Thursday’s downturn wasn’t indicative of a broader unraveling of the overall upbeat momentum for equities.
Peter Cardillo, chief market economist at Spartan Capital Securities, said “we don’t think yesterdays plunge will turn into meaningful correction.”
“In other words, yesterdays decline is likely to be short lived as rotation maybe unfolding,” he said.
That said, some market player see Thursday’s moves as just the start of a purge of excess on Wall Street after equities surged to records following coronavirus-induced lows in late March.
“Diminishing breadth, the weakest seasonal period of the year (even for election years), over extended rallies in specific megacap names, and an approaching presidential election that brings great uncertainty are all likely reasons for yesterday’s plunge in the market,” wrote Jeff deGraaf, founder of Renaissance Macro, in a Friday research note.
The ICE U.S. Dollar Index DXY, 0.06%, which tracks the performance of the greenback against its major rivals, rose 0.3% on Friday at 93.041.