US stocks ended sharply lower in a broad sell-off on Friday, ending a week buffeted by strong economic data, corporate tax hike worries, the Delta variant of SARS-CoV-2 and possible shifts in the US Federal Reserve’s timeline for tapering asset purchases.
All three major US stock indices lost ground, with the NASDAQ Composite Index’s weighed down as rising US Treasury yields pressured market-leading growth stocks.
They also posted weekly losses, with the S&P index suffering its biggest two-week drop since February.
“The market is struggling with prospects for tighter fiscal policy due to tax increases, and tighter monetary policy due to Fed tapering,” said David Carter, chief investment officer at Lenox Wealth Advisors Inc in New York.
“Equity markets are also a little softer due to today’s weak consumer sentiment data,” Carter added. “It’s triggering concerns that the Delta variant could slow economic growth.”
A potential hike in corporate taxes could eat into earnings also weigh on markets, with leading Democrats seeking to raise the top tax rate on corporations to 26.5 percent from 21 percent.
While consumer sentiment steadied this month, it remains depressed, according to a University of Michigan report, as Americans postpone purchases while inflation remains high.
Inflation is likely to be a major issue next week, when the US Federal Open Markets Committee holds its two-day monetary policy meeting. Market participants will be watching closely for changes in nuance, which could signal a shift in the Fed’s tapering timeline.
“It has been a week of mixed economic data and we are focused clearly on what will come out of the Fed meeting next week,” said Bill Northey, senior investment director at US Bank Wealth Management in Helena, Montana.
The Dow Jones Industrial Average on Friday fell 166.44 points, or 0.48 percent, to 34,584.88; the S&P 500 lost 40.76 points, or 0.91 percent, at 4,432.99; and the NASDAQ Composite dropped 137.96 points, or 0.91 percent, to 15,043.97.
For the week, fell less than 0.1 percent, the S&P 500 lost 0.6 percent and the NASDAQ shed 0.5 percent.
The S&P 500 ended below its 50-day moving average, which in recent history has proven a rather sturdy support level.
Of the 11 major sectors in the S&P 500, all but healthcare ended in the red, with materials and utilities suffering the biggest percentage drops.
COVID-19 vaccine manufacturers Pfizer Inc and Moderna Inc dropped 1.3 percent and 2.4 percent respectively as US health officials moved the debate over booster doses to a panel of independent experts.
US Steel Corp shed 8 percent after it unveiled a US$3 billion mini-mill investment plan.
Robinhood Markets Inc rose 1 percent after Cathie Wood’s ARK Invest bought US$14.7 million worth of shares in the trading platform.
Volume and volatility spiked toward the end of the session due to “triple witching,” which is the quarterly, simultaneous expiration of stock options, stock index futures and stock index options contracts.
Volume on US exchanges was 15.51 billion shares, compared with the 9.70 billion average over the past 20 trading days.
Declining issues outnumbered advancing ones on the New York Stock Exchange by a 1.97-to-1 ratio; on NASDAQ, a 1.00-to-1 ratio favored advancers.
The S&P 500 posted seven new 52-week highs and two new lows; the NASDAQ Composite recorded 67 new highs and 82 new lows.
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