THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.
Stocks keep swinging between gains and losses on Wall Street Friday, as a tumultuous week of abrupt stops and starts comes to a close.
The S&P 500 was down 0.1% in afternoon trading, after a roller-coaster day where it careened from a gain of 0.9% to an equivalent loss. Momentum has been lightning-quick to shift on Wall Street recently, and a similar morning gain for the S&P 500 on Thursday gave way to a 1.8% loss for its fourth drop in five days.
The Nasdaq composite, which includes many of the superstar tech stocks that have been the focus of the market’s recent selling, was down 0.7% after flip-flopping earlier between gains and losses. It has swung at least 1.3% in each of the last five days, with four of those down. The Dow Jones Industrial Average was up 105 points, or 0.4%, at 27,639, as of 2:46 p.m. Eastern time.
Analysts expect swings to continue to rattle markets for weeks, if not months, as investors wait for more clarity on several key issues. At the head of the list of uncertainties, for now at least, is what to do with Big Tech stocks.
Apple, Amazon and others soared through the pandemic as their businesses boomed despite the recession. The coronavirus accelerated a shift to online life that’s benefited them, and a pile-on of investors into Big Tech sent their share prices soaring to levels that critics said were simply too high.
Apple had a nearly irrepressible run this summer where it rose in 13 out of 14 weeks. Zoom Video Communications surged above $450 per share earlier this month after starting the year at less than $70.
That all came to an abrupt halt last week. Worries that the stocks had gotten overheated helped send the S&P 500 to its worst three-day run in nearly three months, and the Nasdaq composite slid 10%. Tech stocks and the market broadly recovered a bit on Wednesday, and they seemed to regain their stride Thursday morning, only for an afternoon swoon to batter them again.
On Friday, tech stocks again swung from gains to losses. The fluctuations came even after Oracle reported stronger profit for its latest quarter than analysts expected. It also gave a forecast for profits in the current quarter that topped Wall Street’s expectations. After leaping as much as 7.9% in the morning, its stock was virtually flat.
Big Tech and the high-growth area of the stock market "just got ahead of itself,” said Jason Pride, chief investment officer of private wealth at Glenmede. “It doesn’t matter how it got there, it matters that it got there and now we’re kind of deflating that overvaluation a little bit.”
The S&P 500 is on track for a loss of 2.6% this week. That would be its second weekly loss in a row, something that hasn’t happened for nearly four months.
After rising as much as 1.5% shortly after trading began, Apple fell back to a loss of 1.3%. Apple is on pace for a loss of 7.4% this week, which would be its worst since March, when the market was still plummeting on worries about the recession caused by the pandemic.
Movements for it and other Big Tech stocks matter more than ever for broad market indexes because their immense size means they can influence the S&P 500 almost by themselves. Five Big Tech companies make up nearly 23% of the index’s entire value.
One big factor that remains in the stock market’s favor is the Federal Reserve, which continues to pump aid into the economy. It has slashed short-term interest rates to record lows and bought up all kinds of bonds to support markets. It also said recently it will keep delivering stimulus even if inflation rises above its target level, as long as inflation had been well under it before then.
A report on Friday showed that inflation remains low, though it was higher than economists expected. Consumer prices rose 1.3% in August from a year earlier, a shade above the 1.2% that investors were expecting.
Following the report, the yield on the 10-year Treasury gave up an earlier gain. It was at 0.66%, down from 0.68% late Thursday.
Unprecedented amounts of aid from Congress, along with the Federal Reserve, also helped the stock market halt its nearly 34% plummet in late March.
But it looks less likely by the day that Congress will approve more support for the limping economy before the November elections, even though investors say such stimulus is crucial after unemployment benefits and other stimulus has expired. Senate Democrats on Thursday shot down a scaled-back package proposed by Republicans, saying it shortchanged too many needs.
Investors are also worried about all the uncertainty that elections bring generally, which can result in big changes for tax laws and regulations that affect corporate profits. Concerns are likewise high about trade tensions between the United States and China, among other major economies, and whether the expectations building for a coming COVID-19 vaccine prove to be too optimistic.
European stock markets made modest moves. The German DAX was close to flat, and the French CAC rose 0.2%. The FTSE 100 in London rose 0.5% after data showed the British economy recouped further lost ground during July after a swath of coronavirus restrictions on businesses were lifted.
Asian markets were stronger. Japan’s Nikkei 225 rose 0.7%, the Hang Seng in Hong Kong climbed 0.8% and stocks in Shanghai added 0.8%. The Kospi in South Korea was close to flat.
AP Business Writer Yuri Kageyama contributed.