Dow bouncing around Friday, with a fourth straight weekly loss for stocks in sight

Stock benchmarks were flipping between positive and negative territory Friday, with major benchmarks in danger of logging a fourth consecutive weekly loss as worries grow over the economic outlook in the absence of renewed aid from Washington, jitters over the November presidential election and rising COVID-19 infections in the U.S. and Europe.

What are major benchmarks doing?

The Dow Jones Industrial Average DJIA, 0.42%  was up 91 points, or 0.3%, at about 26,897, at last check; while the S&P 500 SPX, 0.64%  advanced 13 points, or 0.4%, to around 3,260, hovering well above its correction level at 3,222.76 — commonly defined as a drop of at least 10% from a recent peak — which was being observed closely by market participants, as a sign of further deterioration in the bullish trend for equities. The Nasdaq Composite Index COMP, 1.27% traded up by about 85 points, or 0.8%, at about 10,757.

Stocks rose Wednesday in a choppy session, with the Dow gaining 52.31 points, or 0.2%, to close hat 26,815.44, while the S&P 500 rose 9.67 points, or 0.3%, to 3,246.59. The Nasdaq Composite finished at 3,246.59, up 9.67 points, or 0.3%.

What’s driving the market?

Markets were facing another choppy session as the stock market looked to match its longest weekly losing streak since a period ended Aug. 23, 2019, according to FactSet data.

“Overall, risk sentiment is still raw after investors had to bear witness to the steep declines in U.S. equities this month, as benchmark indices are set to post their first monthly loss since March,” said Han Tan, market analyst at FXTM, in a note. Although the Cboe Volatility Index VIX, -0.74% “appears relatively tame compared to the spike earlier in the month, market participants must remain vigilant and brace for potentially more volatility over the near-term.”

The VIX, which reflects investor expectations for S&P 500 volatility in the coming 30 days, stands just below 30, above its long-term average near 20, after jumping to nearly 36 earlier this month as tech stocks kicked off a sharp market pullback.

The tech-heavy Nasdaq Composite tumbled from a record into correction territory in just three days early this month. The S&P 500 on Wednesday finished 9.6% below a record close hit in early September before rebounding modestly Thursday.

Rising COVID-19 cases have led to the return of some lockdown measures in European countries, while rising cases in parts of the U.S. have highlighted worries about the potential of another wave in this fall. Signs of a slowing of the economic rebound from the pandemic-induced sudden stop in March have undercut sentiment.

Investors continue to watch Washington for signs of progress in long-stalled talks on another round of spending aimed at cushioning the blow of the pandemic. House Democrats on Thursday were preparing a $2.4 trillion aid package that includes a number of items seen having bipartisan support, including direct payments to households, the Paycheck Protection Program, a revival of a federal add-on to state unemployment benefits, as well as a renewal of aid to airlines and money to help restaurants stay open.

But analysts said the path to an agreement remained unclear, while jitters are rising over the prospect of a contested presidential election on Nov. 3 that could leave the outcome of the contest in limbo for weeks.

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That said, “constructive news about Democrats and Republicans working on a compromise appears to be the most-likely trigger for market sentiment to take a decisive turn for the better,” wrote analysts at UniCredit Bank. “Other potential triggers are few and far between: COVID-19 infection cases are surging so rapidly that it will take more than just a few days for any decline in infection rates to appear sustainable.”

“With corporate and economic news flow still light as the end of the quarter approaches next week, investors continue to be rattled by political, social and economic uncertainty as the U.S. November election approaches and new coronavirus cases continue to mount,” wrote Colin Cieszynski, chief market strategist at SIA Wealth Management, in a Friday note.

In economic reports, orders for durable goods rose 0.4% in August, the fourth straight gain but a more modest increase after three straight strong gains, the government said Friday.

Economists had forecast a 1.5% increase in orders for durable goods in August. Orders were up a revised 11.7% in July and 7.7% in June.

Which companies are in focus?

• Shares of Costco Wholesale Corp. COST, -2.35%  were down 1.1% despite topping earnings and revenue expectations for its fiscal fourth quarter.
• Novavax NVAX, 11.77%  shares jumped nearly 6% after the company said Thursday it has started a final-stage study of its experimental COVID-19 vaccine in the U.K.
• Sunworks Inc. stock SUNW, -32.57% sank by nearly 30% after a recent rocket ride higher for the photovoltaic-based power systems company.
• Zillow Group Inc. ZG, +3.21%  raised its outlook for home price growth over the next year, as sales and prices have stayed strong through the summer given increasingly short inventory and continued strong demand. Shares of Zillow were up 1.7%.

How are other markets faring?

The yield on the 10-year Treasury note TMUBMUSD10Y, 0.657% was virtually unchanged but tilted lower on Friday morning at around 0.66%. Bond prices move inversely to yields.

The ICE U.S. Dollar Index DXY, 0.36%, a gauge of the greenback’s value relative to its major rivals, was up 0.2%, on track for its steepest weekly climb since late April.

Gold futures GCZ20, -0.56% retreated, losing all of the ground it made up on Thursday and then some to trade off $15.80, or 0.8%, at $1,861.10 an ounce.

U.S. oil futures CLX20, -0.57% fell 36 cents, or 0.9% to trade at $39.95 a barrel on the New York Mercantile Exchange.

The pan-European Stoxx Europe 600 Index SXXP, -0.33% headed 0.7% lower and the U.K.’s benchmark FTSE 100 FTSE, +0.05% shed 0.4%. In Asia, Hong Kong’s Hang Seng Index HSI, -0.32% declined 0.3% and the Shanghai Composite Index SHCOMP, -0.11% finished the session 0.1% lower. Japan’s Nikkei NIK, +0.50% gained 0.5%. 

Reprinted from yahoofinance, the copyright all reserved by the original author.

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