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By Connor
Smith | Friday, December 17 No Place
Like Stay-at-Home. U.S. equites
fell again on Friday, as rising Covid-19 cases added to an already strange
day for markets. The Dow
Jones Industrial Average fell 532 points, or 1.5%, for its worst day
since Nov. 30. Only five Dow members rose while 25 fell. The S&P
500 dropped
1% and is down three of the past four weeks. The Nasdaq
Composite fared better, dropping less than 0.1% on the
day. The tech-heavy index got an assist from a
rally in stay-at-home stocks, which have been beaten down for much of
the year. Zoom Video
Communications jumped 9.5% for its best day since March 9.
The stock is still down 65% from its all-time closing high of $568.34. It wasn't just Zoom. Stationary bike
maker Peloton Interactive rose 6.6% while streaming platform Roku stock closed up about 8%. Online-education
firm Chegg, which fell last month
following a disappointing outlook amid the reopening, rose 6.4% on Friday. The so-called stay-at-home stocks tend
to move in line with pandemic worries, and fears about the omicron
variant were top of mind for investors and businesses alike. New York state reported 21,027 new Covid-19
cases on Friday, the highest daily mark since the pandemic began. Barron's reporter Josh
Nathan-Kazis writes
that the holiday season is shaping up to be a grim one. In a best-case scenario,
Omicron would move quickly through the U.S. while causing lower rates of
hospitalization and death than earlier waves. That is possible, but with just
three weeks of experience with the variant, it’s dangerous to make
predictions with any confidence. Investors should be ready
for a very challenging month or two, and substantial uncertainty through the
start of next year. Strict lockdowns and school closings still seem unlikely,
but economic activity over the coming weeks will likely be depressed. It isn't just Covid-19 adding to volatile
trading in markets. Barron's reporter Jacob
Sonenshine writes
that while Federal Reserve policy changes have investors on edge, that's not
exactly new. There was another factor
at play on Friday. That was “quadruple-witching,” which
is when stock options, index futures, single-stock futures, and index options
all expire on the same day. When that happens, market makers must hedge their
positions, which causes selling. The stock market is experiencing additional volatility
because of the quadruple witching, wrote Edward Moya, senior market analyst
at Oanda. Lastly, investors are rushing
into safe assets to avoid the volatility in stocks. The 10-year Treasury
note is seeing its price get bid higher, sending its yield down to 1.39% from
a 1.42% closing level Thursday. Even if that yield doesn’t compensate an
investor for higher expected inflation, some market participants prefer to
park their money in these bonds to avoid the steep losses the stock market
can bring at times. Market participants are also moving into the haven U.S.
dollar, the global reserve currency. Investors also need to own dollars to
buy U.S. Treasuries. The U.S. Dollar index rose 0.4% on Friday. As if the pandemic and inflation weren't
enough, there was also "witching" roiling markets on Friday. Watch our TV show Fridays at 9 p.m. or 10:30 p.m. ET;
Saturdays at 11 a.m.; or Sundays at 10 a.m. or 11:30 a.m. ET. This week, see
interviews with retail analyst Dana Telsey, of Telsey Advisory
Group, and Saira Malik, chief investment officer and head of global
equities at Nuveen. |
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DJIA: -1.48% to 35,365.44 The Hot Stock: Cerner +12.9% Best Sector: Real
Estate -0.3%
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