Stocks dipped on Friday as investors remain cautious due to a resurgent Covid virus, a Federal Reserve meeting next week and a historical tendency for September to be a weak month for equities.
The Dow Jones Industrial Average lost about 170 points or 0.5%, dragged down by a 3% drop in Dow Inc. The S&P 500 shed 0.9% and the Nasdaq Composite lost more than 1%.
Mega-cap technology stocks were mostly in the red, with social media giant Facebook dropping 2.5%. Apple and Microsoft also lost 1%.
Thermo Fisher Scientific rallied more than 8% after providing strong 2022 earnings and revenue guidance at its investor day. On the other hand, Moderna lost 5% as the Food and Drug Administration vaccine advisory committee meets Friday to debate and vote on Pfizer and BioNTech‘s application to offer booster shots to the general public.
U.S. Steel fell more than 6% after it revealed plans to build a new steel mill whose construction would start in 2022 with plans to have it operating in 2024. Demand for steel has been high, with prices about quadrupling since summer 2020.
History is not on the market’s side with the S&P 500 averaging a 0.4% decline for September, the worst of any month, according to the Stock Trader’s Almanac. Friday in particular begins a historically weak period for stocks as those September losses typically come in the back half of the month.
Some of the volatility that comes during September is often surrounding so-called quadruple witching, which occurs at the close Friday. This is the expiration of stock index futures, stock index options, stock options, and single-stock futures.
“We expect volatility to increase over the next month driven by a seasonal pickup in investor uncertainty, continued virus uncertainty, and significant monetary and fiscal policy catalysts,” wrote John Marshall, head of derivatives research for Goldman Sachs, in a note Friday. Marshall cited data showing S&P 500 volatility typically increased by 27% from August to October.
Still, stocks are heading into Friday with modest gains for the week. The Dow is up 0.35% and the S&P 500 is up 0.24% since Monday. The Nasdaq Composite has gained 0.3% this week. For the month, stocks are in the red. The Dow is down 1.7% in September. The S&P 500 is off by 1.1% this month but still just 1.6% from its all-time high. The Nasdaq has lost 0.6% this month.
The Federal Reserve meets for two days next week and on Wednesday is expected to give further clues as to when it may start to slow its $120 billion in monthly bond purchases that have supported the recovery, but also perhaps aided in a jump in inflation.
The U.S. 10-year Treasury hopped 4 basis points to 1.37% on Friday.
Fed Chief Jerome Powell has said the so-called tapering could occur this year, but investors are waiting for more specifics. Some investors fear a decline in asset prices as the central bank begins to take away its easy policies.
Shares of Invesco jumped 5% after the Wall Street Journal reported the money manager is in talks to combine with State Street’s asset-management business. Invesco manages about $1.5 trillion.
