The Week In Review
The major averages closed mixed with the Dow Jones taking a hit on concerns over a resurgence of Covid-19 weighed on global markets, though tech shares pushed higher. The Dow Jones Industrial Average fell 269 points, or 0.7%, while the S&P hugged the flat line, closing down 6 points while the Nasdaq Composite added 63 points or 0.4%.
Equities took a hit after Austria announced early in the day that it would re-enter a full national lockdown due to a spike in Covid cases. That followed new restrictions for unvaccinated people in Germany, introduced Thursday as a fourth wave sent daily cases to a record high.
The market was predictably spooked and didn't seem to take into account developments in vaccines, antiviral pills and other ways to fight the virus, according to Ross Mayfield, investment strategy analyst at Baird. It will probably see through this latest spell though, he added.
Markets moved downward anyway, though they pared back deeper declines from the morning. Shares of air carriers were among the first to drop. United Airlines fell 3%, while United and Delta were also lower. Boeing lost nearly 5%.
In other travel names, Airbnb dropped 3% while Booking Holdings dipped 1% and Expedia was down slightly. Cruise lines were about 2% lower.
The pullback in airline and travel stocks came about a week after the Biden administration lifted pandemic travel restrictions that have barred many international visitors for nearly 20 months. That move was cheered by airlines and other travel companies. But the increase in Covid cases and new restrictions in Europe was damping hopes for an immediate rebound in trans-Atlantic travel, a usually lucrative segment that is key to large carriers' return to profitability.
Big energy companies dominated the top decliners in the S&P 500 as demand concerns related to new lockdown orders hurt oil prices, which were already in a slump. Baker Hughs, Hess, Diamondback Energy, Marathon Oil and Devon Energy all took a 5% loss.
Meanwhile, shares of Moderna jumped 5% after the Food and Drug Administration cleared its vaccine booster shot for all adults in the U.S.
Intuit led the S&P 500 higher after posting stronger-than-expected quarterly results Friday that sent its shares soaring by more than 9%. The TurboTax developer also raised its full-year revenue guidance. Nvidia also continued its strong run, with shares rising 3% on continued momentum from its earnings beat earlier this week.
Tech shares broadly continued their rally as U.S. Treasury yields fell and Covid-concerned investors rotated out of banks, energy companies and other value stocks, and into super-cap tech names. Adobe
and Meta Platforms were among the top gainers in the S&P 500, along with Nvidia. Microsoft, Apple and Google were also higher.
The House of Representatives voted Friday to pass President Biden's $1.7 trillion social safety net bill, sending it to the Senate, where it is likely to face an uphill battle in the coming weeks. But its passing still removes some of the uncertainty that had clouded the market, Mayfield said.
Investors are also keeping an eye on President Joe Biden's pick for the next Federal Reserve chair, which he is expected to unveil by the weekend. Many expect an even more dovish Fed if Lael Brainard is named the central bank chief, meaning it would take longer to raise interest rates or tighten policy than under Jerome Powell.
So far this week, the tech-heavy Nasdaq Composite is headed for a 1.5% gain, while the blue-chip Dow is down 1.1%, on pace for its second negative week in a row.
The S&P 500 is on track for a modest rebound from the previous week's loss. The strength of the consumer, evidenced by retailers' blowout earnings and strong U.S. retail data, helped the index fight heightened concerns about inflation throughout the week and gave it a leg up when Covid worries emerged. The S&P is 0.1% below its all-time high.
About 95% of S&P 500 companies have handed in their financial results for the third quarter, and 81% of them reported earnings better than Street's expectations, according to Refinitiv. S&P 500 companies are on track to grow profit by 42.3% year over year.