Shares fell on Friday as investors remain cautious on a resurgent Covid virus, a meeting of the Federal Reserve next week, and a historical trend that September is a weak month for stocks.
The Dow Jones Industrial Average lost around 100 points. The S&P 500 lost 0.5% and the Nasdaq Composite lost 0.55%
Mega-cap tech stocks were mostly negative, while some reopening stocks like airlines, cruise lines and retailers rose. The social media giant Facebook lost 1%. Meanwhile, United Airlines and Carnival Corp. each by more than 1%. American Airlines and Delta also gained 1.5% each. Norwegian Cruise Line grew by 3%.
Invesco's shares rose 7% after the Wall Street Journal reported the asset manager was in talks about a merger with State Street's asset management business. Invesco manages approximately $ 1.5 trillion.
History is not on the market's side as the S&P 500 posted an average drop of 0.4% in September, the worst of any month, according to Stock Trader & # 39; s Almanac. A historically weak period for equities begins on Friday in particular, as these losses typically occur in the later half of the month in September.
Part of the volatility that occurs in September is often related to what is known as the quadruple witching that takes place on the last Friday. This is the expiration of stock index futures, stock index options, stock options, and single stock futures.
"We expect volatility to increase over the next month, fueled by a seasonal increase in investor uncertainty, persistent virus uncertainty, and significant monetary and fiscal catalysts," said John Marshall, director of derivatives research at Goldman Sachs, in a press release from Friday. Marshall cited data showing that the volatility of the S&P 500 typically increased 27% from August to October.
Still, stocks go into Friday with modest gains for the week. The Dow is up 0.35% and the S&P 500 is up 0.24% since Monday. The Nasdaq Composite is up 0.3% this week. Stocks are in the red for the month. The Dow was down 1.7% in September. The S&P 500 is 1.1% behind this month but still only 1.6% from its all-time high. The Nasdaq lost 0.6% this month.
The Federal Reserve will meet for two days next week and is expected to provide further guidance on Wednesday as to when it might slow down its $ 120 billion monthly bond purchases, which helped the recovery but may also have contributed to a surge in inflation. Fed chief Jerome Powell has said tapering could happen this year, but investors are waiting for more details. Some investors fear a fall in asset prices as the central bank begins to lift its loose policy.
On Thursday, the Dow Jones Industrial Average lost 63 points after falling 274 points from its low. The S&P 500 lost 0.16%. The Nasdaq Composite was the outperformer with a gain of 0.13%.
The Census Bureau reported Thursday that August retail sales rose 0.7% for the month, up from the Dow Jones estimate of a 0.8% decline. A separate economic report showed that weekly jobless claims rose to 332,000 for the week ending September 11, according to the Department of Labor. The Dow Jones estimate was 320,000.
"It is widely believed that the economy is slowing under the weight of the Delta variant. Combined with a bad historic stock market season in September and persistent inflation fears, investors have recently become cautious," said Jim Paulsen, chief investment strategist at Leuthold Group. "With economic growth unexpectedly picking up again, investors are wondering whether they have been too cautious about keeping an offer below the entire stock market."