The Dow Jones Industrial Average and S&P 500 were under pressure Friday, as concern over a Covid-19 resurgence weighed on global markets.
The Dow fell 184 points, or 0.53 and the S&P 500 edged 0.06% lower. Meanwhile, the Nasdaq Composite added 0.3% as tech shares gained.
Markets took a hit after Austria announced earlier in the day that it would re-enter a full national lockdown due to a spike in Covid cases. Germany also unveiled Thursday more restrictions for unvaccinated people, as a fourth wave sent daily cases to a record high.
Shares of air carriers were also lower as investors worried about the Austrian lockdown’s potential effects. United Airlines fell 3% while Delta and American fell more than 1%. Other travel stocks dropped too, with Expedia and Booking Holdings down 2% and Airbnb losing nearly 5%. Cruise lines were about 3% lower.
The decline in airline and travel stocks comes 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 is 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 were mostly lower as concerns about energy demand related to new lockdown orders hurt oil prices, which were already in a slump. Occidental Petroleum and Devon Energy led the declines, falling 3% Friday.
Friday’s moves took place as the market rally appeared to have stalled this week near record levels.
So far this week, the blue chip Dow is down 0.6%, on pace for its second negative week in a row. The S&P 500 and the tech-heavy Nasdaq Composite are headed for modest gains, up 0.5% and 0.8% this week, respectively. The S&P 500 is on track for it sixth positive week in seven, sitting 0.3% below its all-time high.
Those weekly moves come despite major retailers reporting strong quarterly earnings. Macy’s and Kohl’s both blew past analyst estimates in their quarterly reports released Thursday.
Intuit also posted stronger-than-expected results, sending its shares soaring by nearly 10%. The TurboTax developer also raised its full-year revenue guidance. Nvidia continued its strong run, with shares rising 1.8% on continued momentum from its earnings beat earlier this week.
More than 90% of the S&P 500 companies have handed in their financial results for the third quarter, and over 80% of them reported earnings better than Street’s expectations, according to Refinitiv. S&P 500 companies are on track to grow profit by 41.5% year over year.
“Better than expected earnings has been the name of the game this week for the market,” Mike Loewengart, managing director of investment strategy at E-Trade Financial. “While investors may have entered earnings season with some trepidation, there are some clear signs that consumers are resilient and corporate balance sheets are strong despite pricing pressures.”
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 be revised in the coming weeks.
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.
— CNBC’s Leslie Josephs contributed to this report.
