US stocks end sharply higher on Friday, but the S&P 500 still posts the biggest weekly decline since February

US stocks ended sharply higher on Friday after a series of mixed economic data, starting October with gains although the major indices posted losses for the week.

The initial optimism on Wall Street was partly linked to the news that Merck & Co. MRK,
and partner Ridgeback Biotherapeutics, said their oral antiviral treatment for COVID-19 reduced the risk of hospitalization or death by 50% for patients with mild or moderate cases.

How were stock indices traded?
  • The Dow Jones Industrial Average DJIA,
    + 0.92%
    rose 482.54 points, or 1.4%, to close at 34,326.46.

  • The S&P 500 SPX index,
    climbed 49.50 points, or 1.2%, to end at 4,357.04.

  • The Nasdaq COMP Composite Index,
    + 1.25%
    rose 118.12 points, or 0.8%, to end at 14,566.70.

For September, the Dow Jones fell 4.3% and the S&P 500 fell 4.8% to end a seven-month winning streak. The Nasdaq Composite was down 5.3%, its worst September in a decade. For the third quarter, the Dow Jones fell 1.9%, the S&P 500 rose 0.2% and the Nasdaq Composite rose 0.4%.

This week, the Dow Jones fell 1.4%, its biggest weekly decline since the week ending September 10, according to Dow Jones Market Data. The S&P 500 lost 2.2% for the week, its largest percentage decline since the week ending February 26. The Nasdaq recorded a weekly decline of 3.2%, also its biggest drop since the week ending February 26.

What drove the market?

Stock markets were choppy on Friday, rebounding in the afternoon after abandoning modest opening gains, as investors assessed a batch of mixed data on the US economy.

US spending and personal income has provided further evidence that the cost of goods and services is on the rise, with the US inflation rate at its highest level in 30 years, and all signs point as price pressures creep into next year.

“People will tell you they’re dark, but they don’t act like they’re dark,” Randy Frederick, managing director of trading and derivatives at Charles Schwab, said in a telephone interview on Friday. “People are still spending. “

The personal consumption expenditure price index climbed 0.4% in August, the government said on Friday, marking the sixth consecutive increase. The rate of inflation for the 12 months ended August fell from 4.2% to 4.3%, the highest rate since 1991, when George HW Bush was president.

The Institute for Supply Management’s manufacturing index for September also rose to 61.1 from 59.9 the month before. A reading of 50 or better indicates improving conditions.

“It’s a very good impression,” Megan Greene, chief global economist at the Kroll Institute, said in a telephone interview on Friday. “I think most of us expected it to slow down a bit.”

Ahead of the morning’s ISM data, a report on the investigational drug from Merck helped the bulls advocate for higher stocks, but concerns over the U.S. debt ceiling debate in Washington, DC may act as a shock absorber as a deadline for lifting it looms.

“Every day we go through where they don’t have an agreement, that’s just one more reason for the market to get volatile and people to get nervous,” Frederick said. “I just hope they fix this problem as soon as possible.”

Nervous investors ditched their stocks on Thursday, little comforted by the announcement of a short-term spending bill to avoid a government shutdown as debt limit wrangling was expected to continue. President Nancy Pelosi overturned a scheduled vote in the US House of Representatives on a bipartisan $ 1,000 billion infrastructure bill Thursday evening as Democratic lawmakers failed to agree on other related expenditure proposals.

Aside from a difficult September and third quarter, the S&P 500 Index is still up 16% this year, according to FactSet data.

“As we head into the final quarter of 2021, the gains for the year to date are still pretty decent, which begs the question of how much is left in the tank and whether this October will live up to the reputation last October and will deliver a huge curve, while giving investors an anxiety attack, ”said Michael Hewson, chief market analyst at CMC Markets UK

“There is certainly cause for concern over skyrocketing energy prices, supply chain disruptions and concerns about more persistent inflation,” he said in a note to customers.

Energy prices have soared, including in Europe, with shortages on the continent as well as in Asia, where China has been hit by blackouts and blackouts. Traders are betting on higher crude demand after a report said Thursday that China ordered state energy companies to guarantee winter supplies at all costs.

Which companies were the center of attention?
  • Shares of Merck closed up around 8.4% on Friday, surging after the company said the experimental pill reduced the risk of serious illness or death from Covid-19 in a study. The company is now considering submitting an emergency use authorization request for treatment to the Food and Drug Administration and will also seek it from other regulatory bodies around the world.

  • Actions of Greenlane Holdings Inc. GNLN rose 5.5% after Jefferies launched coverage of the Boca Raton, Fla.-Based cannabis packaging, rolling papers, glass products and grinders maker with a buy rating and a target price of $ 6.30.

  • Accounting firm PwC will allow all of its 40,000 US customer service employees to work remotely and live wherever they want forever, Reuters reported on Friday.

  • Raymond James analyst Aaron Kessler withdrew his “strong buy” rating on shares of Alibaba Group Holding Ltd. BABA, although he’s getting a little more cautious about the name. Alibaba shares fell 2.6%.

  • Dollar Tree Inc. DLTR was downgraded to the sector weighting from the overweight in KeyBanc Capital Markets as analysts expressed concern over rising supply chain and labor costs. All retailers have been affected by bottlenecks at ports, overseas factory closures and other challenges along the supply chain. Dollar Tree shares climbed about 2.4%.
How did the other assets trade?
  • The yield of the 10-year Treasury bill TMUBMUSD10Y,
    fell about six basis points on Friday to 1.464%, but still posted an increase of less than one basis point for the week in a sixth consecutive weekly increase, according to Dow Jones Market Data.

  • The ICE US Dollar Index DXY, a measure of the currency against a basket of six major rivals, fell 0.2% on Friday, but rose 0.8% for the week.

  • CL00 oil futures closed higher, with the US benchmark rising 1.1% to $ 75.88 per barrel on Friday. Gold futures also rose nearly 0.1% to $ 1,758.40 an ounce for a small weekly gain.

  • On European markets, the Stoxx Europe 600 SXXP index,
    closed 0.4% lower for a weekly decline of 2.2%. The FTSE 100 index closed 0.8% lower, down 0.35% for the week.

  • The Nikkei 225 NIK index,
    closed down 2.3%, down 4.9% for the week. Chinese markets were closed during the Golden Week holidays and will not reopen until next Friday. Hong Kong markets were also closed on Friday.

—Barbara Kollmeyer contributed to this report.

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