Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, USA on December 2, 2021.
Brendan McDermid | Reuters
US stocks came under renewed pressure on Friday, with large averages heading towards a week of losses amid concerns over monetary tightening and the ongoing pandemic.
The Dow Jones Industrial Average lost 550 points, or 1.6%. The S&P 500 lost 1.1% for a second day. The tech-heavy Nasdaq Composite lost 0.4% after trading in the green. At its daily low, the Nasdaq lost 1.5%.
The big averages are well on their way to hit a negative week, with the Nasdaq being the biggest loser. The tech-heavy benchmark is down nearly 3%, while the Dow and S&P 500 are both down more than 1%.
Friday coincided with the expiration of stock options, index options, stock futures, and index futures – a quarterly event known as “quadruple witching,” which is usually associated with increased volatility.
The S&P financial sector was the biggest straggler on Friday after bank stocks outperformed in the previous session. Goldman Sachs was down nearly 4% while Bank of America and JPMorgan were both trading over 2% lower.
Many megacap tech stocks traded in the red. Amazon and Microsoft both lost about 1%, while Alphabet and Meta Platforms also lost 1% each. Microsoft lost more than 6% this week alone, and Apple lost 5% this week.
Former EV favorite Rivian shares fell 11% on Friday after the truck maker announced it would not hit its 2021 production target.
Investors appeared to be moving from high-growth tech stocks to consumer staples as they digested the Federal Reserve’s recent move along with soaring inflation and the proliferation of the Omicron-Covid variant.
“As the Federal Reserve becomes more restrictive and expectations of higher interest rates rise, investors are reducing their exposure to growth stocks,” said Jim Paulsen, chief investment strategist at The Leuthold Group. “Typically, growth stocks have longer duration than value stocks because a larger proportion of their cash flows will come in in the distant future.”
FedEx stock rose 5% after quarterly earnings and sales exceeded expectations and announced a $ 5 billion buyback. The shipper has also restored its original EPS forecast for 2022.
Covid-19 vaccine makers Moderna and Pfizer are well on their way to be the biggest winners in the S&P 500 this week, with weekly returns of 14% and 13% respectively.
Earlier this week, the Fed announced a more aggressive plan to end its bond purchases and intends to hike rates several times in 2022.
“Trading will remain very choppy for the remainder of the year as investors struggle with falling trading volumes in the upcoming sessions,” said Edward Moya, senior market analyst at Oanda.