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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When the Nasdaq has had as ugly a start to September as it just had, it has always finished the month lower


Technology stocks got wrecked Tuesday on Wall Street, and that bodes ill for the rest of the month, according to Dow Jones Market Data.

The decline in the Nasdaq Composite Index
COMP,
-4.11%

pushed the tech-heavy index into a correction, commonly defined as a drop of at least 10%, but no more than 20%, from a recent peak, and reaffirmed the bearish view that tech-related stocks had mounted too brisk a run-up in the aftermath of the worst public-health crisis in a century.

Tuesday’s bitter slump, resulting in a 4.1% drop for the Nasdaq Composite, marked the worst start to the index in September, a notoriously weak month for U.S. equities, on record. The index has sunk 10% over the past three sessions, following a record close Sept. 2.

And the stats for the outlook for the market appear to show that it’s tough for the index to recover from the likes of the downturn it just faced.

When the Nasdaq has previously tumbled by at least 4% in the first five days of September, it has ended lower. The Nasdaq has booked five Septembers since 1974 (not including Tuesday’s drop) in which it registered declines of at least 4%, and in four of those five declines — 1974, 2000, 2001 and 2008 — the equity benchmark added to its losses (see attached chart):


Dow Jones Market Data

To be sure, that’ s hardly a significant sample size, but it’s still a stat worth considering as the market looks to right itself following three withering days for formerly high-flying tech stocks.

The moves by the Nasdaq Composite may also have broader implications for the market as a whole, since buzzy tech-related names like Tesla Inc.
TSLA,
-21.06%
,
Apple Inc.
AAPL,
-6.72%
,
Amazon.com Inc.
AMZN,
-4.39%
,
Facebook Inc.
FB,
-4.09%
,
Google parent Alphabet Inc.
GOOG,
-3.68%

GOOGL,
-3.64%
,
and Netflix Inc.
NFLX,
-1.75%
,
which have represented the handful of mega-capitalization companies that have all helped to power this resurgence in equities in the throes of a pandemic, all are sitting on multiday losing streaks.

Although bullish investors hope that the declines in the index helped to clear away some of the frothiness that had accumulated since the March lows for the stock market, there are some concerns that the tech wreckage could portend longer-term bad news for the Dow Jones Industrial Average
DJIA,
-2.24%

and the S&P 500 index
SPX,
-2.77%
,
which also skidded by more than 2% on Tuesday.



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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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U.S. regains 1.4 million jobs in August and unemployment drops to 8.4% as economic recovery shows resilience


The numbers: The U.S. regained 1.4 million jobs in August and the unemployment rate posted a surprisingly large drop to 8.4%, suggesting an economic recovery is still plowing ahead even if the pace of growth has slowed since the start of the summer.

The increase in hiring last month exceeded Wall Street’s forecast. Economists polled by MarketWatch had forecast a 1.2 million gain. U.S. stocks fell in Friday trades.

The employment picture was a bit softer after stripping out the hiring of 238,000 temporary Census workers and those who work in public education.

Private-sector hiring rose by 1 million, down from 1.48 million in July, the government said Friday.

The most positive news was a big reduction in the official jobless rate to 8.4% from 10.2%, marking the fourth straight decline from a pandemic peak of 14.7%. A separate survey of households showed a much larger number of people returning to work (3.76 million) and a sharp decline in the unemployed (-2.8 million).

“I would say today’s jobs report was a good one,” Federal Reserve Chairman Jerome Powell told NPR in an interview.

One caveat: The jobless rate would have been closer to 9% if households gave an accurate description of their employment status, the Bureau of Labor Statistics said. Some survey respondents have mistakenly classified themselves as absent from work instead of unemployed, a problem that has plagued the BLS survey since the pandemic began.

Several million Americans still haven’t returned to the labor force, however, since the start of the pandemic and some 29 million were reportedly receiving jobless benefits as of the middle of last month.

Read: Initial jobless claims fall to new pandemic low of 881,000 — but there’s a big catch

The start of the school year, what’s more, has also spawned fresh problems for companies and their employers.Many parents lack day-care options and are grappling with how to care for their school-age children learning at home while they work at the same time.

A new Federal Reserve study found the new school year has made it harder for businesses that are hiring to attract workers.

Read:Economy softened in August, Fed says, as some temporary layoffs turn permanent

A stalemate in Congress over another financial-rescue package has also left many unemployed Americans in a more precarious financial position. A $600 federal unemployment stipend expired at the end of July and small businesses can no longer apply for loans to help cover payroll costs.

Read: Did the expired $600 federal jobless benefit keep people from going back to work?

A spate of companies such as American Airlines
AAL,
+1.87%
,
United
UAL,
+2.16%

and MGM Resorts
MGM,
+1.95%
,
meanwhile, have announced new furloughs and layoffs with their businesses still in a deep slump.

A United Airlines ticket agent helps a passenger check in for a flight at San Francisco International Airport. United Airlines announced plans to furlough over 16,000 workers including pilots, flight attendants and technicians.


Getty Images

Some companies warn job losses could become permanent without more government help or a faster rebound in the economy.

The U.S. shed more than 22 million jobs during the worst of the pandemic. So far it’s restored about 10.7 million jobs, leaving about half of the people who were laid off still out of work.

What happened: The number of peopled employed by government jumped by 344,000, largely because of a big increase in temporary Census workers.

In the private sector, retailers led the way in hiring again as they brought back almost one-quarter of a million workers. Restaurants also added 134,000 jobs.

Retailers, restaurants and hotels have borne the brunt of the U.S. effort to contain the coronavirus. The number of customers they can allow has been restricted and many Americans are still too worried about the coronvirus to eat out, go to stores or travel.

Even after a spate of rehiring, for instance, some 2.5 million restaurants jobs still haven’t returned.

The rest of the hiring was scattered in a variety of industries.

White-collar businesses added almost 200,000 jobs, though more than half were temporary. Transportation and warehousing jobs increased by 78,000. Health-care providers boosted payrolls by 75,000. Financial firms hired 36,000 workers. And manufacturers added 29,000 people.

Average hourly wages rose 11 cents to $29.47 an hour. The yearly rate of pay appeared to soar early in the pandemic, but only because more lower-paid workers lost their jobs than higher paid ones.

The normally slow-changing wage data is likely to be less useful until the economy is mostly recovered. Wages were growing about 3% a year before the pandemic.

The increase in employment in July marked down slightly to 1.73 million. The increase in June was little changed at 4.79 million.

How many people are really unemployed, though, is still a bit of a mystery. The monthly employment survey puts the number at 13.6 million, but the weekly jobless-claims report indicates it could be closer to 30 million.

A broader measure of unemployment known as the U6 suggests the “real” rate was 14.2% in August, down from 16.5% in the prior month. The U6 rate includes workers who can only find part-time work and those who have become too discouraged to look for jobs because so few are available.

Big picture: The U.S. economy have proven quite resilient, expanding again in August despite the summer viral outbreak and the end of massive federal benefits. A variety of reports such as restaurant reservations, retail spending and in-store shopping also suggest an increase in consumer spending and steady if slower growth in the economy.

What’s less clear is whether the economy can sustain its foward progress.

Unemployment remains sky-high, the threat of a fresh wave of layoffs is rising and the coronavirus is still very much a threat. A divided political leadership in Washington and one of the most divisive presidential elections in history is unlikely to help, either.

See:Marketwatch’s Coronavirus Economic Recovery Tracker

What they are saying? “The August employment report was stronger than we expected,” said chief economist Richard Moody of Regions Financial. “ That said, while the labor market is clearly healing, it remains far from healthy.”

There are certain industries that are essentially stuck until the virus recedes further, such as air travel, sporting event and concert admissions,” said chief economist Stephen Stanley. “But for most of the economy, the return to normal is occurring inch by inch and day by day, with plenty more to come.”

Market reaction: The Dow Jones Industrial Average
DJIA,
-0.56%
,
S&P 500
SPX,
-0.81%

and Nasdaq
COMP,
-1.26%

all declined in Friday trades.



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