A stubbornly high jobless rate and the continuing rotation from tech to value brought the Dow down 130 points and the Nasdaq 140. The Nasdaq now down 10% from its recent record has now confirmed a correction that began September 2nd. But as today’s expert points out, “They had an incredible last week of August and this is a rational profit-taking scenario at the moment.” The consensus remains that tech names will bounce back. The Fed has outlined a litany of conditions that must be in place before they will declare the economy recovered and employment to be full. Among these are wage growth, workforce participation, and less disparities in minority joblessness. Volume was again a little above the 4-week average at 9.7 billion.
THU SEPTEMBER 17, 2020 5:01 pm
Wall Street falls as tech sells off
again, jobless claims still high
DJ: 28,032.38 +36.78 NAS: 11,050.47 -139.86 S&P: 3,385.49 -15.71 9/16
DJ: 27,901.98 -130.40 NAS: 10,910.28 -140.19 S&P: 3,357.01
-28.48 9/17
(Reuters)
- U.S. stocks fell on Thursday as technology-related shares slid for a second
day and as government data showed high levels of weekly jobless claims. Amazon.com Inc AMZN.O dropped
2.3% and Apple Inc AAPL.O fell
1.6%, making them the biggest drags on the S&P 500 and Nasdaq. Last week,
the Nasdaq's losses put the index down 10% from its closing record, confirming
a correction began on Sept. 2. From
the March market lows, “this has been an amazing recovery represented by a few
good tech names,” said Jake Dollarhide, chief executive officer of Longbow
Asset Management in Tulsa, Oklahoma.
“They
had an incredible last week of August, and I think this is a rational
profit-taking scenario at the moment.” Last week, all three major U.S.
stock indexes posted a second straight week of declines as investors
sold tech-related names that had powered the S&P 500 to record highs in a
dramatic rally from the March lows. Dollarhide
said he expects
tech-related names to bounce back before the end of the year.
The heavily weighted S&P 500 technology
index .SPLRCT was
down 0.8% on the day, hitting the benchmark index the hardest. The S&P 500
real estate sector .SPLRCR and
financials .SPSY also
sold off sharply. Real estate was down 2.2% and financials fell 1%. Adding to concerns about a stalling recovery, the Labor
Department’s report showed that while fewer Americans filed new claims for unemployment benefits
last week, the number remained
perched at extremely high levels.
On Wednesday, the Federal Reserve pledged to keep interest rates low for
a prolonged period to lift the world’s biggest economy out of a pandemic-induced
recession.
The Dow
Jones Industrial Average .DJI fell 130.4 points, or
0.47%, to 27,901.98, the S&P 500 .SPX lost 28.48 points, or
0.84%, to 3,357.01 and the Nasdaq Composite .IXIC dropped 140.19
points, or 1.27%, to 10,910.28.
Fed Chair Jerome Powell laid out a menu of factors -
including wage growth, workforce participation and disparities in minority
joblessness relative to whites - that must be satisfied before the Fed would view the economy
at maximum employment, and even consider raising interest rates. “Investors love when the Fed lowers rates,
because they feel that’s good for market,” Dollarhide said. “But if the Fed
says we need to keep rates low for longer, then people start worrying about the
economy itself.”
General Electric Co GE.N rose 4.4% a day after Chief Executive
Officer Larry Culp said the company's free cash flow would turn positive in the
second half. Ford Motor Co F.N gained 3.7% as it said it had begun
production of the new generation F-150 pickup truck at its Michigan facility.
Declining issues outnumbered advancing
ones on the NYSE by a 1.61-to-1 ratio; on Nasdaq, a 1.36-to-1 ratio favored
decliners. The S&P 500 posted 9 new
52-week highs and no new lows; the Nasdaq Composite recorded 38 new highs and
18 new lows.
Volume
on U.S. exchanges was 9.70 billion shares, compared with the 9.47 billion average for the full
session over the last 20 trading days.
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