On Friday, the stock market closed lower for the second day after a wild session in which companies that would benefit from the reopening of the economy tried to offset another steep decline for the tech sector. There was a 0.6% decline in the Dow Jones Industrial Average, which is the equivalent of 159.24 points, as it closed at 28,133.31. At some point, there was a 2.2% decline in the 30-stock average and it fell as much as 628.05 points. For a moment, the Dow had also been higher on Friday. There was also a 0.8% decline in the S&P 500 as it fell to 3,426.96.
However, the S&P 500 did close well off its session low. There had been a 3.1% decline in the broader market index in its session low and it had also traded positive briefly on the day. As far as Nasdaq is concerned, it fell to 11,313.13, which is a decline of 1.3%, but it did manage to close higher than its low of the day. There were broad gains seen in bank stocks, along with a 1% rise in Boeing shares as well. Citigroup and JP Morgan were up by 2% and 2.2%, respectively. There was a surge of 3.4% for Bank of America while 1.1% for Wells Fargo.
United Airlines also saw an advance of 2.2% and a 5.4% climb was in store for cruise operator Carnival. According to some analysts, these changes in the stock market could finally lead to some rotations and would bring about new leadership, something that had been lacking for a long while. As far as shares of tech companies are concerned, they closed mostly lower. Alphabet, Amazon, and Facebook all saw a loss of more than 2%. Microsoft experienced a drop of 1.4% while it was 1.8% for Netflix. However, Apple saw an increase of 0.1% after it had fallen by as much as 8.3%.
Tesla had also seen a drop of nearly 8%, but it erased it by ending the session higher by 2.3%. There was more than 1% a day decline in the S&P 500 tech sector after having its worst session since March. The sector declined by more than 4% for the week. The sell-off in tech came after the sector had driven the majority of the broader market’s comeback off the low experienced due to coronavirus. Market strategists said that the market had seen some excessive valuations recently, particularly in the tech sector, and these had to be corrected.
An excellent example was the run-up seen in Apple and Tesla stocks after both companies had announced stock-split. Both the companies had recently rallied after they had made the announcement. According to reports, billions of dollars had been bought by Japan’s SoftBank in individual stock options of some big tech firms in the last month. This had driven up volumes and initiated a trading frenzy. Many analysts credited the heightened options trading activity for adding some froth to the stock market and this could be easily seen in tech companies.