Wall Street closed out another punishing week Friday with the S&P 500 posting its first back-to-back monthly loss since the pandemic first gripped the economy in March.
The S&P 500 dropped 1.2% and ended the week with a 5.6% loss, its worst in seven months. Sharp drops in big technology stocks drove much of the selling, reflecting worries that expectations built too high for some of the market’s biggest stars, including Apple and Amazon.
Investors have bid up shares in those and other Big Tech companies this year, anticipating they would deliver strong profits, but their latest results and uncertain outlooks left traders wanting.
Wall Street was already racked by fears about the potential economic damage from surging coronavirus counts around the world, Washington’s inability to provide more support for the economy and uncertainty surrounding the presidential election. President Donald Trump often cites the stock market as a barometer of his administration’s performance on the economy.
“Today, you have investors who are taking profits in the tech stocks that they expected to do well in the third quarter,” said Sam Stovall, chief investment strategist at CFRA. “And now the focus once again is on COVID-19, and investors are just selling ahead of a weekend.”
The S&P 500 lost 40.15 points to 3,269.96. It ended October with a 2.8% loss. The Dow Jones Industrial Average fell 157.71 points, or 0.6%, to 26,501.60. Earlier, it had been down 515 points.
The Nasdaq composite gave up 274 points, or 2.5%, to 10,911.59. The tech-heavy index is within 0.6% of a “correction,” Wall Street-speak for a decline of 10% or more from an all-time high.
Much of the market’s focus Friday was on Apple, Amazon, Facebook and Google’s parent company. They are four of the five biggest stocks in the S&P 500 by market value, which gives their movements outsized sway on the index, and they were principal forces behind Wall Street’s huge rally since March.
All four reported profit for the summer that was even better than analysts were expecting, just like the other stock in the Big Five did earlier this week. But also like Microsoft, most nevertheless fell as investors found reasons for concern within their reports.
Apple dropped 5.6% after investors focused on weaker revenue than expected for its iPhones and sales in China. Amazon fell 5.4%, and Facebook lost 6.3%.
Twitter, another high-profile tech stock, slumped 21.1% for the largest loss by far among stocks in the S&P 500. It also reported better-than-expected earnings for the latest quarter. Investors focused instead on its growth in daily users, which fell short of analysts' expectations.
Google’s parent company, Alphabet, was an outlier and rose 3.8% after reporting growth in digital ad spending.
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