Dow closes 300 points lower Friday as rate worries hinder postelection rally: Live updates
Stocks tumbled on Friday as the postelection rally fizzled and investors fretted over the path of interest rates.
The Dow Jones Industrial Average lost 305.87 points, or 0.70%, to end at 43,444.99. The S&P 500 slipped 1.32% and closed at 5,870.62, while the Nasdaq Composite fell 2.24% to 18,680.12.
Declines in pharmaceutical stocks weighed on the 30-stock Dow and the S&P 500, with Amgen down about 4.2% and Moderna off by 7.3%. President-elect Donald Trump said on Thursday that he planned to nominate vaccine skeptic Robert F. Kennedy Jr. to lead the U.S. Department of Health and Human Services. The SPDR S&P Biotech ETF (XBI) tumbled more than 5% and posted its worst week since 2020.
The information technology sector of the S&P 500 was the worst-performing corner of the market, down more than 2%, as Nvidia, Meta Platforms, Alphabet and Microsoft tumbled. Tesla was a rare exception among its “Magnificent Seven” peers, as shares of the electric vehicle giant and so-called “Trump Trade” were higher by 3%.
“While we think the macro backdrop still bodes well for risk assets, in the near term we should expect some micro volatility, particularly around potential policy shifts under a new administration,” said Kristy Akullian, head of iShares investment strategy, Americas, at BlackRock. “We expect the U.S. equity market to continue to move higher, but don’t expect that rise to happen in a straight line.”
Traders also grappled with recent comments from Federal Reserve Chair Jerome Powell, who said on Thursday that the central bank wasn’t “in a hurry” to cut interest rates. He noted that the economy’s strong growth will permit policymakers to take their time as they decide the extent to which they reduce rates. Boston Fed President Susan Collins took the cautious sentiment further, telling The Wall Street Journal that a rate cut next month is not a certainty.
October retail sales data on Friday showed a 0.4% increase, slightly better than the 0.3% forecast from economists polled by Dow Jones. That finding follows an October consumer inflation report that was in line with economists’ projections.
The major averages had been coasting on a postelection rally since Trump’s victory at the polls — the three indexes touched fresh highs on Monday — but the upward momentum has been slowing. The S&P 500 posted a weekly loss of 2.1%, while the Nasdaq Composite slid about 3.2%. The 30-stock Dow fell 1.2% during the period.
Stocks close lower, notch losing week
Stocks closed lower on Friday and were in the red for the week as a postelection rally ran out of steam.
The S&P 500 lost 1.32% to close at 5,870.62, while the Nasdaq Composite shed 2.24% to 18,680.12. The Dow Jones Industrial Average pulled back more than 305 points, or 0.7%, to finish the session at 43,444.99.
— Brian Evans
Third quarter shows maybe corporate profits are less than they’re cracked up to be
Maybe there are chinks in the armor of third-quarter corporate profits. Yes, the S&P 500 blended earnings growth rate, including reported numbers and estimates, for the Q3 of 2024 is 5.4%, marking the fifth straight quarter of earnings growth, wrote John Butters, senior earnings analyst at FactSet.
But the 75% of companies that have beaten analysts’ earnings estimates in the quarter is below the five-year average of 77%. Moreover, S&P 500 companies are topping forecasts by an average 4.3%, almost half the five-year average of 8.5%.
Meanwhile, the look ahead may be less bright. Of the 80 companies in the S&P 500 that have estimated their fourth-quarter earnings, 54, or 68%, issued negative guidance, while 26, or 32%, made positive forecasts. The 68% that issued downbeat assessments topped the five-year average of 58% and the 10-year average of 62%, FactSet said.
Perhaps most ominously, the forward price-to-earnings ratio for the S&P 500 looking out over the next year stands at 22.0, above the five-year forward P/E average of 19.6 as well as the 10-year average of 18.1, the researcher said.
— Scott Schnipper
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