NEW YORK CITY, RAW – Wall Street has wrapped up the first week of the new year with daily and weekly losses as investors worried about looming US interest-rate hikes and unfolding Omicron news.
The Nasdaq posted its biggest weekly percentage fall since February 2021 and led declines for the day in the major indexes.
Stocks fell on Friday after the December US jobs report missed expectations but was still seen as strong enough to keep the Federal Reserve’s tightening path in place.
Friday’s Labor Department data showed the US jobs market was at or near maximum employment even though employment rose far less than expected in December, when there were worker shortages.
Minutes released on Wednesday of the Fed’s December 14-15 policy meeting showed officials at the US central bank viewed the labour market as “very tight”, and signalled the Fed may have to raise rates sooner than expected.
“The investor takeaway is that the labour market continues to be tight despite the headline miss,” Michael Arone, chief investment strategist at State Street Global Advisors in Boston, said.
“Investors are concerned the Fed will be more aggressive than expected.”
Consumer discretionary and technology sectors led the way lower on the S&P 500 on Friday.
Big tech companies have benefited from low interest rates.
On the flip side, the S&P 500 financials sector and banking index extended recent gains and reached record closing highs.
The bank index rose 9.4 per cent for the week, registering its biggest weekly percentage gain since November 2020.
The Dow Jones Industrial Average fell 4.81 points, or 0.01 per cent, to 36,231.66; the S&P 500 lost 19.02 points, or 0.41 per cent, to 4,677.03; and the Nasdaq Composite dropped 144.96 points, or 0.96 per cent, to 14,935.90.
For the week, the Dow fell 0.3 per cent, the S&P 500 declined 1.9 per cent and the Nasdaq dropped 4.5 per cent.
Banks have risen with US Treasury yields, with the US benchmark 10-year yield soaring to a two-year high on Friday on the outlook for Fed rate hikes.
“The sentiment has turned negative,” Jack Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, said.
“Right now the market is nervous and in the mood to sell at the first hint of bad news.”
Rising cases of the Omicron variant of COVID-19 have also caused investor jitters.
Investors have been rotating out of technology-heavy growth shares and into more value-oriented shares, which they think may do better in a high interest-rate environment.
The S&P 500 value index added 1 per cent this week, outperforming the S&P 500 growth index which fell 4.5 per cent – its biggest weekly percentage drop since October 2020.
The S&P 500 energy sector gained sharply for the week, rising 10.6 per cent in its best week since November 2020.
‘Meme stock’ GameStop jumped 7.3 per cent after the video game retailer said it is launching a division to develop a marketplace for nonfungible tokens and establish cryptocurrency partnerships.
Advancing issues outnumbered declining ones on the NYSE by a 1.01-to-1 ratio; on Nasdaq, a 1.38-to-1 ratio favoured decliners.
The S&P 500 posted 50 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 83 new highs and 262 new lows.
Volume on US exchanges was 10.21 billion shares, compared with the roughly 10.4 billion average for the full session over the last 20 trading days.