Dow climbs in early Friday action as Wall Street attempts to cap tumultuous trading week with an upswing


Stock benchmarks on Friday rose modestly higher as investors looked to close out a volatile, holiday-shortened week that has the tech-heavy Nasdaq Composite on track for its biggest weekly loss since the height of the pandemic-induced market selloff in March.

How are major benchmarks trading?

The Dow Jones Industrial Average
DJIA,
+0.19%

rose 117 points, or 0.4%, to around 27,650, while the S&P 500
SPX,
+0.07%

gained 14 points, or 0.4%, to trade at 3,353. The Nasdaq Composite Index
COMP,
-0.09%

climbed 48 points, or 0.5%, at 10,952. But all three benchmarks were trading off their intraday peak near the open, highlighting the week’s choppy action.

The Dow on Thursday fell 405.89 points, or 1.5%, to close at 27,534.58, while the S&P 500 ended with a loss of 59.77 points, or 1.8%, at 3,339.19. The Nasdaq Composite fell 221.97 points, or 2%, to finish at 10,919.59. Through Thursday, the Dow was down 2.1% for the week, while the S&P 500 was off 2.6% and the Nasdaq was 3.5% lower; markets were closed Monday for Labor Day.

What’s driving the market?

A decline in the S&P 500 index for the week would mark the benchmark’s first back-to-back weekly drop since May.

“While monetary policy is set to remain supportive for several more quarters, valuations are high across assets and volatility is resurfacing,” said Elia Lattuga, co-head of strategy research at UniCredit Bank, in a note. “The breadth of the rally is still limited and the recovery uneven—hence developments in the economic outlook and political risks represent significant threats to risk appetite.”

Stocks were unable to follow through Thursday on a Wednesday bounce that saw equities recover somewhat from a three-day, tech-led rout that pushed the Nasdaq into correction territory, falling more than 10% from its record close set last week.

Weakness on Thursday was partly tied to the inability of U.S. politicians to agree on a new coronavirus rescue package after Democrats blocked a Republican bill on the Senate floor, leaving the way forward unclear, analysts said.

Meanwhile, investors have fretted that the sharp rally that took stocks from their March pandemic lows to new all-time highs had left valuations significantly stretched for the large-cap, tech-related stocks that had led the rally this year. Among those highfliers, shares of Apple Inc.
AAPL,
-0.85%

 and Netflix Inc.
NFLX,
+1.22%

 were on track for weekly declines of more than 6%, while Facebook Inc.
FB,
-0.57%

 is off more than 5%.

In U.S. economic news, the consumer-price index for August rose 0.4% last month, beating average economists’ estimates for a rise of 0.3% but falling below the past two months at 0.6%. On a year-over-year basis, the CPI increased 1.3% after gaining 1.0% in July, the Labor Department said on Friday

Looking ahead, Federal budget figures for August are due at 2 p.m. Eastern.

Which companies are in focus?
What are other markets doing?

The yield on the 10-year Treasury note
TMUBMUSD10Y,
0.675%

 rose 0.4 basis point to 0.687%. Bond prices move inversely to yields.

The ICE U.S. Dollar Index
DXY,
-0.12%
,
which tracks the performance of the greenback against its major rivals, fell 0.1%.

Gold futures
GCZ20,
-0.08%

were off 0.3% at $1,958 an ounce, threatening to snap a three-day winning streak. The U.S. crude oil benchmark
CL.1,
-0.10%

 fell 16 cents, or 0.5%, to $37.13 a barrel.

The Stoxx Europe 600 index
SXXP,
-0.11%

 was edging 0.1% lower, while the U.K.’s benchmark FTSE
UKX,
-0.26%

rose 0.2%. In Asia, Hong Kong’s Hang Seng Index
HSI,
+0.78%

and the Shanghai Composite Index
SHCOMP,
+0.78%

 both rose 0.8%, while Japan’s Nikkei
NIK,
+0.73%

rose 0.7%.



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Investing legend known for his annual predictions says the world could be in for a big surprise — in a good way


Byron Wien


Bloomberg

Blackstone’s
BX,
-3.45%

Byron Wien has been offering up his list of potential surprises for decades now. As with even the most prescient of Wall Street pundits, he’s got plenty of misfires to go along with his hits, but CNBC’s Jim Cramer once said, “you can make a fortune” from Wien’s work.

So, in that spirit, what’s his latest take on the market?

Well, back in January, Wien was bearish on electric cars, bullish on the economy and predicted that volatility
VIX,
+3.18%

would ultimately slam the markets. Now, with his batch of calls yielding mixed results, Wien offered up a taste of what he sees in the coming months.


‘A big surprise on a global level is if there were more harmony between China and the West. The hostility between the two largest economies in the world is not good for the markets. So if there would be some reconciliation or some rapprochement between the U.S. and China that would restore normal relations, it would be interpreted favorably by the financial markets. That’s unlikely in a Trump presidency. It’s more likely, but not certain, in a Biden presidency.’

That’s how Wien responded when asked his thoughts looking forward in an interview published over the long weekend. While thawing relations between China and the U.S. might eventually provide a boost to markets, for now, it’s rough going out there.

“There’s a lot of speculation going on. That’s probably not a healthy thing,” he said, adding that he sees the economy rebounding more slowly than most expect. “The market is vulnerable.”

Wien said the common train of thought is that the economy isn’t doing as well as the financial markets, but he doesn’t see it that way.

“There really isn’t a disconnect,” he said. “Individual investors are propelling the market to new highs, and they are doing it by pushing up the prices of the internet related stocks, the stocks that are benefiting from people working at home. “

Wien also threw water on the comparisons between today and the dot-com bubble, saying he believes every market cycle to be different.

“In the late nineties, the dot-com bubble was fueled by a real breakthrough in technology, the advent of the internet. It was changing people’s lives, and that was a positive change. It just got carried to excess,” he said. “Today, this is a different thing. It’s a negative surprise: A virus that is going to change the way we live, and it’s difficult to assess the long-term implications of it.”

Wien said, from his perspective, that stocks are overpriced, but not as “outrageously” as they were back then. Hence, he doesn’t see an imminent bear market.

As for the economy, the healing could take a while, and, according to Wien, it depends on an effective vaccine, which may or may not arrive by the end of the year — a time frame that he believes the stock market is already pricing in.

“That’s a realistic assumption,” he said. “But I don’t think that people like me will get it until the end of next year. So a return to normal is a 2022 phenomenon. At best, the economy is a quarter or one third of the way back to normal.”

What’s an investors to do in the meantime?

“There is a good part of the market that’s underpriced,” he said. “Airlines, transportation and hospitality have performed poorly, and some represent good value for patient investors who can tolerate the risk as a part of their portfolio.”

Patience was needed Tuesday, as the Dow Jones Industrial Average
DJIA,
-2.24%
,
Nasdaq Composite
COMP,
-4.11%

and S&P 500
SPX,
-2.77%

were all firmly in negative territory.



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Asian markets mixed as China export data offsets impact of Wall Street’s retreat


Asian markets were mixed in early trading Monday, following a sharp selloff on Wall Street last week.

Japan’s Nikkei 225
NIK,
-0.33%

dipped 0.3% while Hong Kong’s Hang Seng index
HSI,
+0.05%

gained 0.1%. The Shanghai Composite
SHCOMP,
-0.15%

declined 0.2% while the smaller-cap Shenzhen Composite
399106,
-0.25%

retreated 0.2%. South Korea’s Kospi
180721,
+0.76%

rose 0.7%, while benchmark indexes in Taiwan
Y9999,
-0.14%

, Singapore
STI,
+0.11%

and Indonesia
JAKIDX,
-0.13%

were mixed. Australia’s S&P/ASX 200
XJO,
+0.14%

were little changed.

Stocks in Hong Kong and mainland China improved after the release of data that showed China’s August exports were stronger than expected from the prior year, after another strong increase in July.

Shares of Chinese chip maker Semiconductor Manufacturing International Corp.
981,
-19.74%

tumbled about 20% in Hong Kong trading after a Wall Street Journal report that the Trump administration is considering placing export restrictions against it, as it has with fellow chip maker Huawei Technologies.

U.S. markets are closed Monday for the Labor Day holiday. Last week, the tech-heavy Nasdaq Composite
COMP,
-1.26%

saw a 3.3% weekly decline, its largest since March, while the Dow Jones Industrial Average
DJIA,
-0.56%

fell 1.8% and the S&P 500
SPX,
-0.81%

lost 2.3%.

“We view the latest selloff as a bout of profit-taking after a strong run,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note Friday.

“Stocks have had a nervy start to trading Monday after the massive two-day slide for global equities since June left investors on edge,” Stephen Innes, chief global markets strategist at AxiCorp, wrote in a note Monday. “In the short-term, more so with U.S. markets closed today, it should remain an extremely choppy affair, with bounces likely being sold by design.”

In energy trading, U.S. benchmark crude
CLV20,
-1.30%

fell to $39.34 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude
BRNX20,
-1.10%

, the international standard, slipped to $42.30 a barrel.

The dollar
USDJPY,
+0.01%

inched up to 106.29 Japanese yen from 106.24 yen Friday.



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Here are the biggest stock-market losers on Thursday as the tech sector tanks


An epic run for technology stocks ended Thursday, as they led a broad decline for the U.S. market. Lists of the day’s worst performing stocks in benchmark indexes are below.

• The Dow Jones Industrial Average
US:DJIA
was down 808 points, or 2.8%, for the session, and is down 0.9% for the year so far. (All price changes in this article exclude dividends.)

• The S&P 500 Index
US:SPX
fell 3.5% but is still up 6.9% on the year.

• The Nasdaq Composite Index
US:COMP
took a 5% dive, slicing into its 27.7% year-to-date gain. David Bahnsen, chief investment officer of the Bahnsen Group in Newport Beach, Calif., wrote in an email that a pullback in technology stocks was appropriate, as “the Nasdaq has advanced violently since March and many names are at absurd valuations.”

MarketWatch reporter William Watts explained why the stock market’s high valuations weren’t limited to the dominant technology companies.

All 11 components of the S&P 500 ended the day with significant declines:

S&P 500 sector

Price change – Sept. 3

Price change – 2020

Price change – 2019

Information Technology

-5.8%

30.5%

48.0%

Consumer Discretionary

-3.6%

25.5%

26.2%

Communication Services

-3.3%

14.8%

30.9%

Industrials

-2.8%

-4.8%

26.8%

Materials

-2.8%

4.8%

21.9%

Health Care

-2.7%

4.2%

18.7%

Consumer Staples

-1.9%

3.9%

24.0%

Real Estate

-1.6%

-6.2%

24.9%

Financials

-1.6%

-18.7%

29.2%

Utilities

-1.3%

-8.2%

22.2%

Energy

-0.7%

-42.8%

7.6%

Source: FactSet

Dow Jones Industrial Average

All but two of the 30 components of the Dow declined on Thursday:

Company

Ticker

Price change – Sept. 3

Price change – 2020

Price change – 2019

Apple Inc.

US:AAPL -8.0%

64.7%

86.2%

Microsoft Corp.

US:MSFT -6.2%

37.8%

55.3%

Home Depot Inc.

US:HD -4.4%

25.8%

27.1%

Salesforce.com Inc.

US:CRM -4.2%

62.9%

18.7%

Amgen Inc.

US:AMGN -4.0%

2.8%

23.8%

Honeywell International Inc.

US:HON -3.6%

-6.0%

34.0%

Intel Corp.

US:INTC -3.6%

-15.8%

27.5%

Visa Inc. Class A

US:V -3.5%

11.2%

42.4%

Cisco Systems Inc.

US:CSCO -3.5%

-14.6%

10.7%

Boeing Co.

US:BA -3.4%

-48.2%

1.0%

Nike Inc. Class B

US:NKE -3.4%

11.4%

36.6%

International Business Machines Corp.

US:IBM -2.9%

-7.2%

17.9%

Johnson & Johnson

US:JNJ -2.8%

2.5%

13.0%

Walmart Inc.

US:WMT -2.1%

21.6%

27.6%

3M Co.

US:MMM -1.9%

-5.7%

-7.4%

Travelers Cos. Inc.

US:TRV -1.8%

-15.8%

14.4%

Dow Inc.

US:DOW -1.7%

-11.6%

N/A

Caterpillar Inc.

US:CAT -1.7%

-0.6%

16.2%

Merck & Co. Inc.

US:MRK -1.7%

-6.0%

19.0%

Procter & Gamble Co.

US:PG -1.6%

10.7%

35.9%

Walt Disney Co.

US:DIS -1.6%

-7.9%

31.9%

Coca-Cola Co.

US:KO -1.4%

-8.8%

16.9%

UnitedHealth Group Inc.

US:UNH -1.3%

7.6%

18.0%

Goldman Sachs Group Inc.

US:GS -1.2%

-9.7%

37.6%

McDonald’s Corp.

US:MCD -1.1%

8.2%

11.3%

Chevron Corp.

US:CVX -1.1%

-31.7%

10.8%

JPMorgan Chase & Co.

US:JPM -0.3%

-27.3%

42.8%

Walgreens Boots Alliance Inc.

US:WBA -0.2%

-37.1%

-13.7%

American Express Co.

US:AXP 0.1%

-16.1%

30.6%

Verizon Communications Inc.

US:VZ 0.1%

-1.3%

9.2%

Source: FactSet

Scroll the table to see all the data.

You can click on the tickers for more about each company.

S&P 500

Among the S&P 500, 446 stocks were down on Thursday. Here are the 20 stocks with the biggest declines for the session:

Company

Ticker

Price change – Sept. 3

Price change – 2020

Price change – 2019

Qorvo Inc.

US:QRVO -9.8%

4.5%

91.4%

Nvidia Corp.

US:NVDA -9.3%

121.3%

76.3%

Fortinet Inc.

US:FTNT -9.0%

13.1%

51.6%

Skyworks Solutions Inc.

US:SWKS -8.7%

15.7%

80.4%

Zebra Technologies Corp. Class A

US:ZBRA -8.5%

5.4%

60.4%

Advanced Micro Devices Inc.

US:AMD -8.5%

80.0%

148.4%

Apple Inc.

US:AAPL -8.0%

64.7%

86.2%

DexCom Inc.

US:DXCM -7.8%

88.8%

82.6%

Cadence Design Systems Inc.

US:CDNS -7.7%

55.8%

59.5%

Campbell Soup Co.

US:CPB -7.5%

-1.8%

49.8%

Juniper Networks Inc.

US:JNPR -7.5%

-6.3%

-8.5%

Autodesk Inc.

US:ADSK -7.4%

32.0%

42.6%

West Pharmaceutical Services Inc.

US:WST -7.2%

77.8%

53.4%

Paycom Software Inc.

US:PAYC -7.0%

7.3%

116.2%

KLA Corp.

US:KLAC -6.6%

13.0%

99.1%

S&P Global Inc.

US:SPGI -6.5%

29.5%

60.7%

Albemarle Corp.

US:ALB -6.5%

27.6%

-5.2%

Synopsys Inc.

US:SNPS -6.4%

54.3%

65.2%

Microsoft Corp.

US:MSFT -6.2%

37.8%

55.3%

ServiceNow Inc.

US:NOW -6.2%

66.1%

58.6%

Source: FactSet

Nasdaq-100

The Nasdaq-100 Index
US:NDX
(The largest 100 non-financial stocks in the Nasdaq) lost 5.2% on Thursday, though it is still up 34.8% this year so far. Here are its 10 worst-performing components for the day:

Company

Ticker

Price change – Sept. 3

Price change – 2020

Price change – 2019

Zoom Video Communications Inc. Class A

US:ZM -10.0%

460.4%

N/A

Nvidia Corp.

US:NVDA -9.3%

121.3%

76.3%

MercadoLibre Inc.

US:MELI -9.1%

90.1%

95.3%

Tesla Inc.

US:TSLA -9.0%

386.5%

25.7%

DocuSign Inc.

US:DOCU -8.7%

226.6%

84.9%

Skyworks Solutions Inc.

US:SWKS -8.7%

15.7%

80.4%

Advanced Micro Devices Inc.

US:AMD -8.5%

80.0%

148.4%

Apple Inc.

US:AAPL -8.0%

64.7%

86.2%

DexCom Inc.

US:DXCM -7.8%

88.8%

82.6%

Cadence Design Systems Inc.

US:CDNS -7.7%

55.8%

59.5%

Source: FactSet



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Stock-market rout: Why it’s too early to call tech plunge the start of a correction


Big rallies often come to an ugly end — and that was certainly the case Thursday for tech stocks and other high-flying sectors that have benefited from momentum-driven waves of buying. But that doesn’t mean a full-fledged correction for the most popular stocks — or the broader market — is under way.

“It’s very difficult to say definitively that something that is up 28% on the year and up [more than 70%] from the bottom going down 4% is a sustainable correction,” said David Bahnsen, chief investment officer at Newport Beach, Calif.-based The Bahnsen Group, referring to the tech-heavy Nasdaq Composite Index
COMP,
-4.96%

COMP,
-4.96%
.
While a potentially brutal Nasdaq correction is likely inevitable, there’s no “formulaic” way to tell when one has started, he said in an interview.

Key Words: Is this ‘the beginning of the end?’ Billionaire Bill Ackman shares his thoughts on the big market retreat

By the close, the Nasdaq was down 5%. The S&P 500
SPX,
-3.51%

fell 3.5% and the Dow Jones Industrial Average
DJIA,
-2.77%

ended the day down more than 800 points, or 2.8%, after falling more than 1,000 points at its session low. The drop marked the biggest one-day percentage declines for all three benchmarks since June, and ended a four-day winning streak for the Nasdaq and a 10-day string of gains for the S&P 500 tech sector.

See:These were the biggest stock-market losers on Thursday as tech shares tanked

Warning signs abounded as technology shares kept pushing higher, market watchers said. Options volatility remained stubbornly high even as stocks continued to rally — a sign of nervousness — and tech valuations, while a poor guide to market timing, became increasingly stretched, said Fawad Razaqzada, analyst with ThinkMarkets, in a note.

Related:Tech stocks and the rest of the market are both very expensive — for 2 ‘completely different reasons’

Also, momentum indicators, such as the relative strength index, were at levels perceived as extremely overbought on major indexes, which meant that “even the most bullish speculators chasing momentum would have found it difficult to justify buying at such extreme levels,” he said.

The selloff could be an indication of things to come, “where fundamentals play a larger part in valuations, as opposed to the irrational exuberance that has persisted in recent months within tech,” said Peter Essele, head of portfolio management for Commonwealth Financial Network.

Essele said the lack of a broad selloff across all sectors showed that “hot money” had been chasing large tech names.

Indeed, the lack of heavier selling outside the most high-flying sectors pointed to signs of rotation, a positive sign for the overall market, Bahnsen said.

While the Dow fell more than 800 points, shares of JPMorgan Chase & Co.
JPM,
-0.31%
,
the world’s largest bank, declined only 0.3% and shares of Exxon Mobil Corp.
XOM,
-0.20%
,
the world’s largest oil company, lost only 0.2% after spending much of the day in the green. All 11 S&P 500 sectors fell, but energy shares lost only 0.6% and financials declined 1.6% — both are among the most out of favor in 2020, down nearly 43% and 19% year to date, respectively.

Down days where you see energy and financials holding up despite steep losses elsewhere indicates rotation, not capitulation, a bullish sign overall, Bahnsen said.

Also, in the era of heavy ETF ownership, when a fund needs to sell off Apple shares, shares of companies that don’t have organic selling pressure get pulled down with them, he said.

So now what? Friday’s session already carried the potential for volatility, coming ahead of a three-day holiday weekend and after investors get a look at the July jobs report.

Economic Preview: U.S. likely added 1.2 million jobs in August, economists say, but hiring has slowed

Investors might have second thoughts about technology shares at still-elevated levels, Razaqzada said, which could make for either increased rotation into lagging sectors, pushing tech stocks into a period of consolidation or beginning a proper correction.



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