Week 36 in Brief
U.S. stocks ended lower Friday, posting weekly losses as investors remained concerned that the delta variant of covid-19 and rising cases may be slowing economic recovery, despite new vaccination mandates announced by President Joe Biden on Thursday night.
How did the major indices perform?
- The Dow Jones Industrial Average slid 271.66 points, or 0.8%, to 34,607.72.
- The S&P 500 fell 34.7 points, or 0.8%, to 4,458.58.
- The Nasdaq Composite dropped 132.76 points, or 0.9%, to 15,115.49.
- For the week, the Dow slid 2.2% and is down for two consecutive weeks.
- The S&P 500 lost 1.7% this week, its longest losing streak since Monday, February 22, 2021, when the market fell for five straight trading days.
- The Nasdaq declined 1.6% this week, its largest one-week percentage decline since the week ending July 16, 2021, according to FactSet data.
What drove the market?
- The blue-chip Dow index booked back-to-back weekly declines for the first time since June, with the U.S stock market seeing broad declines Friday.
- Apple Inc led the Dow lower when a federal judge in the Epic Games Inc. case issued an injunction that said the company can no longer force developers to use its payment system, effectively bypassing commission fees of 15% to 30%. However, the iPhone maker has not ruled as an antitrust monopolist.
- Coronavirus concerns: This week’s trading came amid concerns about the impact of the coronavirus delta variant on global economic growth in recent months.
- US President Biden on Thursday announced new vaccine mandates, including a requirement that executive-branch employees, as well as federal contractors, vaccinate, with no test alternative. Biden is also considering a Labor Department rule requiring businesses with 100 or more workers to ensure their employees are vaccinated or show a negative test result weekly or more frequently.
- Federal Reserve: While the focus is on rising COVID cases, markets are also watching the Federal Reserve for an indication of when it might taper its bond-buying purchases. With the stock market near record highs, some investors are growing concerned about the end of “some of the massive stimuli” that have pushed the market higher, including fiscal and monetary stimulus programs introduced during the pandemic.
- Economic Data: U.S. producer-price index rose 0.7% in August, above-average forecast of economists for a 0.6% rise, but down from a 1% jump in July. Overall producer prices were up 8.3% in August from a year earlier though, up from 7.8% in the prior month. That’s the largest gain since the data was first collected in November 2010.
- Some Fed officials have described inflation as short-lived and economists are starting to talk about prices peaking in the wholesale sector. But producers are still struggling with shortages, bottlenecks, and transportation woes.
Which stocks were in focus Friday?
- Shares of Echo Global Logistics Inc. rocketed 52% higher Friday after the transportation and supply chain company announced an agreement to be acquired by the private equity firm The Jordan Company LP in a deal valued at $1.3 billion.
- Kroger Co. reported second-quarter net income totaling $467 million, or 61 cents per share, down from $819 million, or $1.03 per share last year. Its stock dropped 7.5%.
- Wells Fargo Corp. shares dipped about 0.1% on Friday despite a $250 million civil penalty from the Office of the Comptroller of the Currency for not meeting requirements of its 2018 action against the bank.
- The shares of Bumble Inc. rose 4.5% after the dating app said the size of the previously announced stock offering increased by 20% and announced the pricing of the offering at $54.00 a share.
- Children’s clothing brand OshKosh B’Gosh has joined with lifestyle brand Kith for a 28-piece capsule collection that will be available on Friday at all Kith stores, the Kidset website, and Kith’s European e-commerce site. OshKosh B’Gosh, a 126-year-old brand, is part of the Carter’s Inc. portfolio. Carter’s stock rose 1.6%.
- Shares of Apple Inc. fell 3.3% after a federal judge in the Epic Games Inc. case ordered an injunction that would allow developers to provide in-app purchases on the App Store, effectively bypassing commission fees of 15% to 30%. However, it was not ruled by an antitrust monopolist.
How did the European markets perform?
- European stocks closed lower on Friday, down more than 1% this week as investors weighed risks from tighter monetary policies after the European Central Bank signaled a slowdown of pandemic-era bond purchases.
- The pan-European STOXX 600 index fell 0.3% and declined for four of five sessions this week as worries persisted about a slowing global economic recovery.
- Defensive sectors such as healthcare (.SXDP) and real estate (.SX86P) notched the biggest weekly declines, as investors positioned for a possible pickup in economic growth.
- News of a call between Chinese leader Xi Jinping and U.S. President Joe Biden offered some relief to battered Asian stocks, particularly tech companies that have come under heightened regulatory scrutiny in Beijing.
- Tech stocks (.SX8P) in Europe rose 0.7%, while luxury stocks got a boost as France’s LVMH (LVMH.PA) rose 0.8% after HSBC recommended buying the stock.
- European stocks found support after the ECB stressed it was not about to close the money taps despite projecting higher growth and inflation for the eurozone.
- European shares have hovered below their mid-August record highs on the back of strong earnings and recovery prospects, but major money houses are skeptical of further gains, particularly in U.S. stock markets that are home to high-growth companies.
How did Asian markets perform?
Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.14%, while the Nikkei 225 led the Hang Seng lower. They fell 2.07% and 0.27% respectively.
Commodities and Bonds
- The 10-year Treasury note rose 4 basis points to 1.34%. Yields and debt prices move in opposite directions.
- Oil futures rose, with West Texas Intermediate crude settling 2.3% higher at $69.72 a barrel for a weekly climb of 0.6%.
- Gold futures fell, with the December contract settling 0.4% lower at $1,792.10 an ounce for a weekly loss of 2.3%.
The dollar rose about 0.2% Friday, as measured by the ICE U.S. Dollar Index. The gaugeclimbed 0.6% for the week.
While the corporate calendar will likely remain quiet starting next week as companies begin to enter their so-called “quiet periods” ahead of the final two weeks of the quarter, the IPO calendar will start to heat up as more than 110 companies are set to go public in the next four months.