Dow edges higher but tech stocks skid lower to end week

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Stock indexes traded mostly lower Friday morning, with tech-related shares slumping as bond yields continued to rise, a day after the Dow Jones Industrial Average and S&P 500 closed at records.

What are major benchmarks doing?

  • The Dow Jones Industrial Average rose 155 points, or 0.5%, to 32,642.
  • The S&P 500 index was down 13 points, or 0.3%, at 3,926.
  • The Nasdaq Composite Index fell 186 points, or 1.4%, to 13,209.

The Dow on Thursday rose 188.57 points, or 0.6%, to close at 32,485.59, building on the previous session’s record close, while the S&P 500 logged its first record finish since Feb. 12, rising 1% to 3,939.34. The Nasdaq Composite jumped 2.5%.

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For the week, the Dow is on track for a weekly gain of 3.5%, the S&P 500 is aiming for a 2% climb over the period while the Nasdaq Composite is on track for a 1.9% advance.

What’s driving the market?

A rebound by tech-related shares that led stocks on Thursday was giving way to some selling on Friday, amid a renewed rise in Treasury yields, with the rate on the 10-year note jumping more than 8 basis points to trade above 1.61%.

Need to Know: Here’s how far the Nasdaq could fall if bond yields reach 2%

It has been a volatile week for equities, including the Nasdaq, which has seen gains or losses of more than 2% in three sessions.

“We believe the recent equity volatility is likely to continue as investors seek to balance increasing optimism over growth with worries about higher inflation,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note.

“But while we expect conditions to remain volatile, the most recent developments on three of the main market drivers — stimulus, pandemic news, and inflation data — point to further equity upside,” he said.

President Joe Biden on Thursday signed a $1.9 trillion COVID-19 relief package into law. In a televised speech Thursday night, Biden pledged to make all adults eligible for vaccines by May 1.

The combination of aggressive fiscal spending and progress on vaccine rollouts are seen spurring economic growth but also potentially stoking inflation, at least in the short term.

“I remain confident that the downside risk is mild relative to recent gains,” wrote Colin Moore, global chief investment officer, at Columbia Threadneedle Investments, in a research report. “The reality of global economic recovery in the second half of 2021 will most likely restore balance to the relationship between investor expectations and outcomes,” the CIO wrote.

Analysts said technology shares may also be vulnerable to pressure after China’s market regulator on Friday said it had imposed fines on some of the country’s largest tech firms.

Also, Bloomberg reported that the Biden administration had informed some suppliers of China’s Huawei Technologies Co. that it would impose tighter conditions on previously approved export licenses, barring items for use in or with 5G devices.

Meanwhile, a U.S. inflation at the wholesale level for February, the producer-price index came in with a 0.5% rise, as expected. Excluding volatile food and energy prices rose 0.2% for the month, compared against expectations for a rise of 0.3%, according to Econoday. On an annualized basis, the core PPI index was up 2.2% over past year vs 2% in prior month.

The University of Michigan’s preliminary consumer sentiment index for March rose to 83, beating expectations for a rise to 78.9 from and a February reading of 76.8. The market didn’t appear to react significantly to the data.

Which companies are in focus?

  • Shares of Ulta Beauty Inc. fell more than 9% after it reported lower fourth-quarter sales and profit year over year late Thursday. It also announced that Chief Executive Mary Dillon will be replaced by company President David Kimbell.
  • GoodRx Holdings Inc. shares fell 12% after the healthcare company reported adjusted earnings that were above Wall Street expectations but guided for lower first-quarter sales
  • DocuSign were under pressure, down 5.5%, even after the electronic authentication company issued a better-than-expected quarterly outlook in its most recent quarterly report.
  • Novavax says its COVID vaccine is effective against variants of the deadly virus. Its stock was up over 8%.
  • Shares of GameStop Corp. rallied 5% Friday, following a 1.9% drop in the previous session, on an otherwise mixed morning for other meme stocks. 
  • Boeing Co. has received an order from a private investment firm 777 Partners to buy 24 737 MAX airplanes with an option to purchase a further 60, according to a Reuters report. Shares of the Dow component were up 1.2%.
  • Shares of AMC Entertainment Inc.  shot up Friday, putting it on track for a weekly gain of 36.0%, and has now run up 95.9% amid a four-week win streak.
  • Shares of Charles Schwab CorpSCHW rose Friday, after the discount brokerage released its monthly activity update, which showed new brokerage accounts in February more than tripling from the year-ago increase.

How are other assets faring?

  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, rose 0.5%.
  • Oil futures traded slightly lower, with the U.S. benchmark CL.1 slipping less than 01% to $65.97 per barrel. Gold futures GC00 was tumbling $18.70, or 1.1%, to trade at $1,703.90 an ounce, on Comex.
  • The pan-European Stoxx 600 Europe index SXXP traded 0.4% lower and London’s FTSE 100 UKX was barely in positive territory, up less than 0.1%.
  • In Asia, Hong Kong’s Hang Seng Index HSI skidded down 2.2%, the Shanghai Composite Index SHCOMP, rose 0.5%, China’s CSI 300 rose by 0.4%, while Japan’s Nikkei 225 index NIK rose1.7%.
  • Bitcoin prices were off 4% at $55,506 trading on CoinDesk.
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