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Apple shares under pressure.
Josh Edelson/Agence France-Presse/Getty Images
Stocks extended losses Friday, with investors waving off strong quarterly results from technology heavyweights to focus on the uncertain outlook amid a surge in COVID-19 cases in the U.S. and Europe.
On the last trading day of the month, investors also face the prospect of the U.S. elections next Tuesday and no certainty about the timing of any further aid for businesses and consumers from Congress.
What are major indexes doing?
The Dow Jones Industrial Average DJIA, -1.02% was down 410 points, or 1.5%, at 26,249, while the S&P 500 SPX, -1.46% was off 62 points, or 1.9%, at 3,248. The Nasdaq Composite COMP, -2.59% slumped 322 points, or 2.9%, to 10,864.
The Dow on Thursday rose 139.16 points, or 0.5%, to close at 26,659.11, while the S&P 500 added 39.08 points, or 1.2%, to finish at 3,310.11. The Nasdaq Composite gained 180.72 points, or 1.6%, finishing at 11,185.59.
The Dow on Thursday snapped a four-day losing streak, but remained down 5.9% for the week, which would be its largest weekly decline since March. The S&P 500, which broke a three-day streak of declines, was down 4.5% through Thursday, enough for its biggest weekly decline since June.
What’s driving the market?
Markets are focused on “the virus, the election, and stimulus,” said Tom Mantione, managing director, UBS Private Wealth Management, and none offer any hope. “We just saw Germany and France re-enter lockdowns. That’s not helping. What’s going to happen in the U.S., will we follow suit? Oh and by the way, we have no stimulus. There’s no rescue now.”
Stocks have been dogged by worries over the economic outlook as European countries put in place tougher restrictions on activity in response to a surge in COVID-19 cases, while the U.S. saw the number of new daily infections hit records. The U.S. on Thursday saw more than 88,500 new cases on Thursday, a new daily high, The Wall Street Journal reported.
Nervousness over Tuesday’s U.S. elections also continues to hang over the market, analysts said. Democratic challenger Joe Biden has seen his lead over President Donald Trump narrow in national polls, underlining investor fears of an unclear or contested outcome that could drag on for weeks.
See: The stock market’s ‘presidential predictor’ is on cusp of forecasting a Biden victory
If volatility continues, UBS’ Mantione told MarketWatch, he would be an “incremental” buyer of stocks in sectors that look likely to benefit from either administration, such as industrials XLI, -0.43%.
He is also keeping a careful eye on fiscal stimulus talks after the election, and hoping something can be agreed to before late January. “Can the economy wait that long? The economy in aggregate can. But there are individuals people and pockets of the economy that cannot wait,” Mantione said.
The so-called FAANG stocks, which have been key drivers of the stock market’s rally off the lows seen in March, were in focus after Facebook Inc., Apple Inc., Amazon.com Inc. and Google parent Alphabet Inc. all delivered upbeat results, including record-breaking sales, following Thursday’s closing bell. Netflix Inc. also got in on the act, announcing an increase in prices for U.S. customers.
Opinion: Apple, Amazon, Facebook and Google all produce record sales amid Big Tech backlash
While earnings and revenues for the tech juggernauts largely crushed expectations, guidance for the future was far more cautious, reflecting concerns about the long-term effect of COVID-19 on demand, analysts noted.
“The big tech names have been driving all the stock market gains since the summer on the idea their performance was impervious too — or even helped by — the pandemic,” said Jasper Lawler, head of research at London Capital Group, in emailed comments. “The earnings beat expectations but by carrying the weight of the market, tech stocks were priced to perfection.”
On the U.S. data front, personal income rose 0.9% in September, while consumer spending increased 1.4%. Economists polled by MarketWatch had expected income to show a 0.5% rise, while spending was seen increasing 1.1%. Core inflation matched expectations with a 0.2% rise.
The final October reading of the University of Michigan’s consumer sentiment index edged up to 81.8 in October from an initial 81.2. The rise largely reflected growing optimism among Democrats thatBiden would win the presidential election.
Which stocks are in focus?
- Amazon.com Inc. AMZN, -5.39% shares fell 6% after reporting record quarterly sales Thursday, which saw it already reach a record profit total in 2020 thanks to increased spending during the pandemic.
- Apple Inc. AAPL, -5.75% shares were down more than 6% after delivering record September quarter revenue to wrap up its fiscal year, but declining to provide a forecast.
- Shares of Facebook Inc. FB, -6.13% were off 7%. The social-media juggernaut topped forecasts for third quarter profit and revenue, despite a torrent of criticism that included a monthlong ad boycott in July.
- Shares of Google parent Alphabet Inc. GOOG, +4.09% GOOGL, +4.49% bucked the downbeat trend, rising more than 3% after the internet-search giant reported a return to rising ad sales and topped forecasts when it released its third-quarter results after Thursday’s close.
- Twitter Inc. TWTR, -20.92% shares dropped more than 20% after its daily active-user gains fell short of analyst expectations.
- Shares of Netflix Inc. NFLX, -5.67% were down 6% after the streaming giant said late Thursday it would increase prices in the U.S. following a surge in new subscriptions in the first few months of the COVID-19 pandemic.
- Coffee chain Starbucks Corp. SBUX, -1.11% saw shares fall 2.2% after it topped expectations for earnings, but said it lost more than $1 billion in sales because of the pandemic and called for slimmer profits in the next quarter.
- Shares of aerospace and building-products maker Honeywell International Inc. HON, -0.12% were down 1.3%, despite the Dow component delivering third-quarter profit and revenue that topped expectations alongside upbeat guidance.
- Dow component Chevron Corp. CVX, +0.93% shares were down nearly 1% after the energy giant on Friday said it swung to a net loss in the third quarter, but delivered adjusted earnings that beat expectations while revenues fell shy of expectations.
- Shares of Exxon Mobil Corp. XOM, -0.97% were down 2.6% after the oil giant swung to a loss and said revenue fell nearly 30%, as the COVID-19 pandemic took a bite, but delivered results that beat Wall Street expectations.
- Under Armour Inc UAA, +2.35%. shares were up 0.8% after the athletic apparel and goods maker delivered earnings that beat expectations.
What are other markets doing?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.854% was up 3 basis points at 0.855%. Yields and bond prices move in opposite directions.
The pan-European Stoxx 600 Europe SXXP, +0.17% was up 0.2%, while London’s FTSE 100 stock index UKX, -0.08% slipped 0.1%.
Oil futures remained under pressure, with the U.S. benchmark CL.1, -2.46% down 2.2% near $35.38 a barrel on the New York Mercantile Exchange Gold found support, with the December contract GC00, +0.62% up 0.6% at $1,878.80 an ounce.
The ICE U.S. Dollar Index DXY, +0.10%, a measure of the currency against a basket of six major rivals, was up 0.1%.
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