Markets ended sharply lower for the second straight session on Friday as concerns over rising Treasury yields overshadowed impressive jobs data, which points to the strength in the labor market and the economy. The 10-year Treasury yield climbed to its highest level in seven years. Losses were led by technology and communication stocks. All the three major indexes higher earlier in the session but failed to hold on to the gains, ending the day in the red.
The Dow Jones Industrial Average (DJI) declined 0.7% or 180.43 points, to close at 26,447.05. The S&P 500 slumped 0.6% to close at 2,885.57. The Nasdaq Composite Index closed at 7,788.45, declining 1.2%. A total of 7.62 billion shares were traded on Friday, higher than the last 20-session average of 7.16 billion shares. Decliners outnumbered advancers on the NYSE by a 2.15-to-1 ratio. On Nasdaq, a 2.27-to-1 ratio favored declining issues.
How did the Benchmark Perform?
The Dow shed 180.43 points, registering its second straight weekly decline. The losses were led by industrials and technology stocks. Shares of Caterpillar Inc. (CAT – Free Report) and Intel Corporation (INTC – Free Report) declined 2.2% and 2.3%, respectively.
The S&P 500 gave up 16.04 points, led by a decline in technology and communications sectors. Technology Select Sector SPDR (XLK) declined 1.2%, while Communication Services Select Sector SPDR fell 1%. The S&P 500 posted its worst weekly performance since the week of Sep 7.
The tech heavy Nasdaq gave up 91.06 points, led by a decline in tech stocks, including all FAANG stocks. Shares of Facebook (FB – Free Report) and Amazon.com, Inc. (AMZN – Free Report) declined 1% each. Shares of Apple Inc. (AAPL – Free Report) , Netflix, Inc. (NFLX – Free Report) and Alphabet, Inc. (GOOGL – Free Report) , declined 1.6%, 3.4% and 0.8%, respectively. Apple has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Higher Bond Yields Overshadow Jobs Data
Bond yields continued to rise on Friday. The 10-year Treasury yield advanced 2.4 basis points to 3.24%, touching a new high since 2011. The two-year Treasury yield rose 2.897%. The rise in bond yield reflects the growing perception that the economy is growing stronger. This made investors dump bonds thus further pushing yields higher given that prices and bond yields move inversely.
A strong economy makes for a good environment for stocks but higher yields dampened enthusiasm for equities. The rising bond yield overshadowed the job data. The U.S. economy added 134,000 jobs last month. Although the number of job gains came in below expectations, the unemployment rate fell to 3.7%, its lowest level since 1969. Wages grew 2.8% on a year-over-year basis in September.
The week started on a high as the United States, Mexico and Canada reached an agreement to sign a new trade deal replacing NAFTA. However, trade war worries continued to make investors jittery, with markets ending mixed mid week. However, markets got a boost helped by a rally in energy stocks after crude oil prices rose. That said, yields were on the rise amid strong economic data. This saw markets ending in the red in the last two sessions of the week.
For the week, the Nasdaq declined 3.2%, its biggest weekly decline since the week of March 23. The S&P 500 fell 1%, registering its second-straight weekly decline, while the Dow slipped 0.04%.
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