The Dow closed below the 31,000 mark, while the Nasdaq managed to make some gains on Friday to end a volatile week, as investors worried about rapidly rising rates. The Dow and the S&P 500 ended in negative territory, while the Nasdaq finished in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 1.5% or 469.64 points to close at 30,932.37. This bluechip index’s started trading in the green but at one point also reached a session low of 30,911.37 points.
The S&P 500 fell 0.5% or 18.19 points to close at 3,811.15 points. The energy and financial stocks were the worst performers. The Energy Select Sector SPDR (XLE) lost 2.4%, while the Financials Select Sector SPDR (XLF) fell 1.9%. Eight of the 11 sectors of the benchmark index closed in negative territory.
The tech-heavy Nasdaq paired earlier losses for the day to gain 0.6% or 72.91 points to finish at 13,192.34 points. The Nasdaq had earlier hit a session low of 13,024. The gains were driven by a rally in tech stocks. Shares of Facebook, Inc. FB gained 1.2%. Facebook has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The fear-gauge CBOE Volatility Index (VIX) was down 3.95% to 27.95. A total of 15.54 billion shares were traded on Friday, higher than the last 20-session average of 15.4 billion. Decliners outnumbered advancers on the NYSE by a 1.56-to-1 ratio. On Nasdaq, a 1.73-to-1 ratio favored declining issues.
Rising Rates Increase Worries
The sudden sell off in the U.S. Treasury market on Thursday gave rise to worries that resulted in a turbulent session on Friday. This somewhat dampened an otherwise solid month of gains for stocks. The sudden sell off in the Treasury market saw yields, which move in opposite direction to bond prices, rise sharply.
The 10-year-treasury yield rose more than 1.6% at one time on Thursday before it fell to 1.4% on Friday. Investors panicked that the rates could further surge thus leading to a sell off that hit the tech stocks the most on Friday. Treasury yields initially fell after the inflation data was released by then surged again that made the entire session choppy. Although rates once again fell at the close of the day, investors failed to shake off the fears.
Data from the government showed that Americans spent more in the January. Consumer spending increased 2.4% in January for the first time in three months as Americans started receiving the $600 checks as part of the $600 billion coronavirus stimulus package. This was also the highest jump since June. Personal income also jumped 10% in January.
The PCE index, a key measure of inflation, which is closely watched by the Fed rose 0.3% in January up 1.5% year over year.
In other economic reports, the Commerce Department said that trade deficit increased to $83.7 million in January from a revised $83.2 billion in December.
Markets remained volatile for the entire week as investors worried about rising rates, which took a toll on stocks, with all the three indexes registering losses for the week. The Dow shed 1.8%, while the S&P 500 gave up 2.5% for the week. The Nasdaq fell 4.9%, recording its biggest decline since the week ending Oct 30.
On a monthly basis, all the three indexes managed to register gains, as the investors’ sentiment remained upbeat after the new round of coronavirus relief package got approved that saw $600 checks reaching millions of American households. The Dow, S&P 500 and the Nasdaq gained 3.2%, 2.6% and 0.9%, respectively, in February.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Facebook, Inc. (FB) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research