Tech Stocks Lead Wall Street Lower 08/19 16:13
Wall Street capped a choppy week of trading Friday with a broad slide for
stocks that left the major indexes in the red for the week.
(AP) -- Wall Street capped a choppy week of trading Friday with a broad
slide for stocks that left the major indexes in the red for the week.
The S&P 500 closed 1.3% lower, breaking a four-week winning streak. Shares
in more than 80% of the companies in the benchmark index fell, with technology
stock driving much of the pullback.
The tech-heavy Nasdaq composite fell 2% and also ended four weeks of gains.
The Dow Jones Industrial Average dropped 0.9%, ending slightly in the red for
the week. Small company stocks also lost ground, pulling the Russell 2000 index
Friday marked the heaviest selling for the market, including the S&P 500's
biggest decline in more than seven weeks, after a solid run of weekly gains.
The strong market rally in July and early August followed better-than-expected
company earnings and signs that the economy is slowing, possibly setting the
stage for less aggressive rate hikes, the Federal Reserve's main tool for
taming surging inflation.
Minutes from the central bank's interest rate policy meeting last month and
recent statements by Fed officials appeared to signal that the Fed may not be
prepared to relent just yet from its pace of rate increases, said Quincy
Krosby, chief equity strategist for LPL Financial.
"That put the market on notice that perhaps the market may have to contend
with a Fed that continues to raise rates at a steady pace and perhaps does not
pause and take its foot off the pedal," she said.
That gave traders "the perfect excuse to finally begin to burn off" some of
the market's recent gains.
The S&P 500 fell 55.26 points to 4,227.48. It ended with a 1.2% loss for the
week and is now down 11.3% so far this year.
The Dow dropped 292.30 points to 33,706.74, while the Nasdaq slid 260.13
points to 12,705.22. The Russell 2000 gave up 43.38 points to 1,957.35.
Technology stocks had some of the biggest losses and the sector's dip
weighed heavily on the broader market. Microsoft fell 1.4%.
Retailers, banks and communications companies also fell sharply amid the
Meme stock Bed Bath & Beyond sank 40.5% after the high-profile activist
investor Ryan Cohen confirmed that he's sold his stake in the company.
Cryptocurrencies fell broadly as Bitcoin slumped 8.5% to $21,370, according
Bright spots included General Motors, which rose 2.5% after reinstating its
dividend. Foot Locker soared 20% after replacing its CEO and reporting earnings
that beat Wall Street's estimates.
Bond yields gained ground, reflecting expectations of further interest rate
hikes. The yield on the 10-year Treasury rose to 2.97% from 2.89% late Thursday.
Traders had no shortage of company and economic data to review this week,
including the latest batch of earnings from retailers and updates on spending,
home sales and the employment market.
Big retailers including Walmart and Target have warned investors that
inflation is crimping consumer spending. Department store owner Macy's will
report its results next week.
A report on retail sales this week showed that spending remains resilient as
gasoline prices fall and help ease some pressure from inflation.
Wall Street is trying to determine how stubbornly hot inflation is affecting
businesses and consumers and whether the economy can remain resilient and avoid
The data from government and corporate reports is also being closely watched
as investors try to determine how the Federal Reserve will continue with its
plan to fight inflation by raising interest rates. The goal is to raise rates
and slow down economic growth to cool inflation. But, the central bank is
threading a fine line between taming inflation in an already slowing economy
and hitting the brakes too hard and veering the economy into a recession.
Minutes of the Fed's July meeting released this week said inflation is still
is too high and made clear the central bank will keep raising interest rates.
The central bank has raised interest rates twice this year by 0.75 percentage
points, triple its usual margin. Forecasters currently expect a hike of a
half-percentage point at the board's next meeting.
Wall Street will be keenly watching next week's speech by Federal Reserve
Chair Jerome Powell at an annual conference in Jackson Hole, Wyoming.
"The question is does he engage the market with his assessment of the
direction of inflation, the progress the Fed is making and offer any suggestion
of the direction of rate hikes?" Krosby said.