The Dow and S&P 500 closed slightly lower in trading Friday (22/1/2021) after reports of the two blue chip technology firms Intel and IBM. This is due to the dashing of hopes for a full economic reopening in the next few months.
The S&P 500 and Nasdaq posted losses shortly after the opening of trade as US manufacturing activity data surged to its highest level in more than 13.5 years in early January. This figure is quite different from the results of European purchasing managers released previously.
Trading volume was recorded at 12.79 billion shares, compared with the 12.68 billion average for the full session over the last 20 trading days.
IBM Corp slumped 9.91% and Intel Corp slipped 9.29% as post-earnings comments from Chief Executive Officer Pat Gelsinger indicated a lack of strong support from outsourcing.
But losses in the tech sector were offset by gains from Microsoft Corp. Apple Inc, keeping losses in major US stock indexes and lifting the Nasdaq slightly.
The energy and financial sectors were the worst performers among the 11 S&P sectors on Friday, while the defensive utilities and real estate sectors strengthened.
“Any delay or setback in the reopening theme will probably be a drag for the energy sector,” said Andrew Mies, chief investment officer at 6 Meridien in Wichita, Kansas, quoted Saturday (23/1/2021).
Reporting from Reuters, the Dow Jones Industrial Average (DJIA) fell 179.03 points, or 0.57%, the S&P 500 lost 11.6 points, or 0.30% and the Nasdaq Composite added 12.15 points, or 0.09%.
Three major indexes Gained Up
Despite the weaknesses, the three major indexes posted weekly gains. So far this week the S&P is up 1.94%, the Dow is adding 0.59% and the Nasdaq is unofficially gaining 4.19%.
With stock valuations approaching levels not seen since the Dotcom era, some market players say the new variant of Covid and the disruption in vaccine launches pose short-term risks.
This week, on Wednesday (20/1/21) Joe Biden has been sworn in as the 46th president of the United States.
The new president said Friday that the US economic crisis is deepening and that the government needs to take major action now to help struggling Americans.
“The absolute certainty felt by investors a week ago … some of them are starting to disappear from the market,” he said.