U.S. stocks were tempest tossed midday Friday, with major benchmarks seeing tenuous advances amid up-and-down action on Wall Street, as investors weighed COVID-19 vaccine mandates announced by President Joe Biden to fight the coronavirus delta variant that some worry is slowing the economic recovery.
How are stock-index futures trading?
- The Dow Jones Industrial Average was trading 31 points, or less than 0.1%, lower to reach 34,846. The blue-chip index had opened about 224 points higher at its peak before hitting a Friday nadir at 34,714,25.
- The S&P 500 was down less than a point at 4,492, but had set an intraday high at 4,520.47 before hitting a low at 4,477.95.
- The Nasdaq Composite Index climbed 6 points, or less than 0.1%, higher to 15,253, trading in an intraday range between 15,349.47 and a low of 15,207.30.
On Thursday, the Dow industrials fell 151.69 points, or 0.4%, to end at 34,879.38, the S&P 500 index closed down 20.79 points, or 0.5%, to 4,493.28, and the Nasdaq Composite Index finished at 15,248.25, a loss of 38.38 points, or 0.3%.
It’s a topsy-turvy Friday for U.S. stock indexes, with selling in shares of UnitedHealth Group Inc. and Apple Inc. capping gains in the Dow industrials, which had been lower earlier in the session.
Earlier declines in the broad-market S&P 500’s consumer staples, energy and financials sectors, gave way to a modest rise that may be coming as investors opt to buy the market’s dips at the end of the week.
Friday’s volatility caps a holiday-shortened week that has seen the Dow and S&P 500 suffer losses for four consecutive days, marking the longest losing skid since June 18.
The week’s trading action comes amid concerns about the impact of the coronavirus delta variant on global economic growth in recent months.
Biden on Thursday announced new vaccine mandates, including a requirement that executive-branch employees as well as federal contractors vaccinate, with no test alternative. He is also discussing 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.
The U.S. is averaging just under 150,000 new cases a day, with only 53% of the population fully vaccinated, which is well behind many countries in Europe and Canada, according to a New York Times tracker.
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. Investors will have to wait until Sept. 21-22 for the next Federal Open Market Committee meeting. However, there is already speculation that the Fed will set the stage at its next meeting for an announcement of a plan to taper its monthly asset purchases at its November gathering, according to The Wall Street Journal.
Meanwhile, a report on wholesale inflation came in hotter than expected. The U.S. producer-price index rose 0.7% in August, the Labor Department said Friday, down from a 1% jump in July but up from average forecast of economists polled by WSJ for a 0.6% rise.
“The extent that we see flow through to the consumer remains to be seen, but this is another shot to the transitory narrative that has been the dominant reason to continue emergency fed policy,” wrote Sean Bandazian, investment analyst for Cornerstone Wealth, in emailed remarks on Friday.
A number of Fed officials have described inflation as short-lived and economists are starting to talk about prices peaking in the wholesale sector. However, producers are still struggling with shortages, bottlenecks and transportation woes.
“These releases frequently indicate that higher prices will remain sticky for a while,” the Cornerstone analyst said.
Joe LaVorgna, chief economist of the Americas at Natixis, also noted that inflation has the potential to be a much longer-term concern that has negative implications for financial markets.
“With the economy already having recouped the entire amount of its pandemic-related losses and the labor market experiencing record demand for workers, the potential for a permanent regime shift in inflation is high,” the economist wrote in a Friday research note along with colleague Troy Ludtka.
Meanwhile, the European Central Bank said on Thursday that it would conduct asset purchases under its pandemic emergency purchase program, or PEPP, at a “moderately slower pace” after accelerating purchases in recent quarters.
“We expect major central banks to remain supportive of growth, keeping rates lower for longer. This is positive for equity markets, particularly cyclical and value areas of the market,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, to clients in a note on Friday.
Sentiment also appeared to be getting a lift from geopolitics, with broad gains across Asia after a phone call between Biden and his Chinese counterpart Xi Jinping. “The call lasted 90 minutes with both sides putting their own spin on the call, although the civilized tone seemed to serve as a general boost to risk sentiment overnight,” said Saxo Bank’s chief investment officer, Steen Jakobsen, in a note to clients.
Which companies are in focus?
- Shares of Echo Global Logistics Inc. ECHO rocketed 53% higher Friday, after the transportation and supply chain company announced an agreement to be acquired by private-equity firm The Jordan Company LP in a deal valued at $1.3 billion.
- Kroger Co. KR 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 was down nearly 8%.
- Wells Fargo Corp. shares rose 0.7% 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.
- Shares of Bumble Inc. BMBL traded 4.6% lower Friday, 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.
- Vista Outdoor Inc. VSTO announced Friday an agreement to buy San Diego-based golf performance analysis and game enhancement company Foresight Sports for $474 million. Its stock was trading 3.6% higher.
- 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. CRI portfolio. Its stock was up 1.9%.
- Shares of Apple Inc. took a dive in midday trading Friday, 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 an antitrust monopolist.
How are other assets trading?
- The 10-year Treasury note rose 2.4 basis points to around 1.32%. Yields and debt prices move in opposite directions.
- The dollar was trading 0.1% higher, as measured by the ICE U.S. Dollar Index which stood at around 92.57, putting the gauge on track for a 0.6% weekly rise.
- Gold futures were lower, with the December contract off 0.4% to $1,792.60 an ounce and set for a weekly slump of 2.3%.
- Oil futures rose, with West Texas Intermediate crude up 2.1% at $69.59 a barrel and set for a weekly climb of 0.4%.
- The Hang Seng closed 1.9% higher and notched a weekly gain of 1.2%. Elsewhere in Asia, the Shanghai Composite ended up 0.3% and notched a weekly advance of 3.4%, while Japan’s Nikkei 225 NIK advanced 1.3% on Friday, contributing to a weekly gain of 4.3%, putting the index on track for its best monthly gain, 8.2%, since November of 2020 when it surged 15%.
- European equities were mixed, with the Stoxx Europe 600 closing 0.3% lower and the commodity-heavy FTSE 100 gaining less than 0.1%. For the week, the Stoxx was down 1.2%, while the FTSE 100 booked a 1.5% weekly slide.
Video: Wall Street ends down after jobless claims hit 18-month low (Reuters)