Stocks continued their slide on Friday, with the major stock indexes posting a third-straight week of declines.
The Dow Jones Industrial Average fell 337 points, or 1.1%, while the S&P 500 shed 42 points (1.1%). Meanwhile, the NASDAQ took the biggest hit, falling 154 points, or 1.3%, marking six down sessions in a row. The red ink was widespread, with the biggest declines registered by communication services (1.9%), while and consumer staples stocks were down 1.4%. Energy issues were the only segment to buck the trend, rising 1.8%. Oil prices gained three-quarters of a percentage point, with light sweet crude rising to $87.25 a barrel.
Friday’s employment report, which showed the U.S. added 315,000 jobs for the month of August (around consensus), initially appeared to give investors hope that a cooling market would allow the Federal Reserve to ease up on the monetary tightening at its next meeting this month. However, news that Russia had completely cut off natural gas supplies to Europe, which were already down to 20% of capacity, quickly erased the morning’s gains, sending stocks into negative territory. The move was reportedly due to technical problems, but the announcement came shortly after the Group of Seven said it had agreed to an oil price cap for Russian oil.
For the year to date, the Dow is down about 14%, the S&P has lost about 18%, and the NASDAQ remains in bear territory, with a decline of about 26% from its peak. Historically speaking, the month of September has not typically been kind to investors. Moreover, with the Federal Reserve determined to curb inflation, equities face a tough slog in the months ahead.
The August Consumer Price Index (CPI), due out on Tuesday September 13, will be of particular interest to traders. Depending on how strong or weak the reading is, it may prompt the Fed to hike its overnight lending rate another three-quarters of a percent at its next meeting on September 20-21, or ease back to a half-point increase.
As we approach the first session for the holiday shortened week, U.S. stock futures are pointing to a positive open. Elsewhere, Asian markets were mixed overnight, while stocks in Europe are up. Meanwhile, oil futures are up slightly, to around $87.15 a barrel. OPEC and its partners surprised the market yesterday, announcing that they were cutting output by 100,000 barrels a day beginning in October. The alliance had raised daily output by that same amount just last month following President Joe Biden’s visit to Saudi Arabia, but recently noted that the increase was only for the month of September.
– Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
