By Jem Bartholomew and Xie Yu
U.S. stocks fell Friday, with the Dow Jones Industrial Average
on track to close out its worst week and month since March,
following a sharp selloff in big technology stocks.
The Dow dropped 1.3%. It has already shed more than 7% this
week, putting it on track for its worst weekly performance since
the height of the market tumult.
The S&P 500 fell 1.5% and tech-heavy Nasdaq Composite was
Volatility has dominated markets this week, prompted by a record
high in coronavirus infections in the U.S., fresh lockdowns in
Europe that threaten economic growth, risks tied to the Nov. 3
elections and a mixed bag of earnings from big tech.
"Markets are concerned that we are replaying February and
March," said Chris Beauchamp, chief market analyst at IG Group. "It
probably still isn't in that category yet, but it is heading in the
U.S. households boosted spending in September as higher pay
helped boost incomes, according to the Commerce Department. But
even as consumers increased spending since the summer, the pace of
gains has slowed into early fall.
The yield on the 10-year Treasury was 0.844% Friday, from 0.834%
Earnings reports and guidance from technology companies weighed
heavily on Big Tech. Twitter plunged 20% after posting its slowest
user growth in years and warning that uncertainty around the U.S.
election could compress ad spending.
Apple shares dropped 5.6% after quarterly iPhone sales fell from
a year earlier. That, combined with a delay in the launch of the
company's new smartphone, led to iPhone revenue falling more than
analysts had expected.
While big tech has driven the U.S. stock market recovery this
year, that means "when we see any disappointments on particularly
high-multiple stocks, then obviously the magnitude of the downgrade
or the earnings-miss becomes far greater," said UBS strategist Nick
Shares of Facebook, Amazon.com, Tesla, Microsoft and Netflix
were all down more than 2%.
"The big tech earnings were not that bad but markets did not
respond positively, so that does suggest a deeper sense of
negativity in the market," said Seema Shah, chief strategist at
Principal Global Investors.
In contrast, shares in Google's parent Alphabet rose 4.4%. The
company reported third-quarter profit that outstripped analyst
Shares of Exxon Mobil fell 1.4%, after it reported its third
consecutive quarterly loss as the pandemic continued to sap oil
Overseas, the Stoxx Europe 600 wavered between gains and
Europe is once again at the epicenter of the coronavirus
pandemic, with the continent now recording more and faster-rising
deaths than the U.S. in an abrupt reversal of fortunes. Fresh
lockdowns by governments in response to the rising infection
levels, led by France and Germany, are weighing on markets.
This week, "you've clearly got a big shift in tightened mobility
restrictions, which of course have an impact on economic growth and
corporate profits," said Mr. Nelson. "We've been relatively
cautious for the last six weeks, thinking markets have maybe
disconnected from the macro and the Covid news flow. And this week
there's been an abrupt reconnection there."
The rise in infections across parts of Europe is stretching the
capacity of hospitals in the worst-hit cities in France, Belgium,
Italy and elsewhere. On a per capita basis, deaths from Covid-19 in
Europe are now rapidly approaching U.S. levels, after running
significantly below since May.
"The sentiment is just so whipsawed at the moment," said Andy
Maynard, managing director of equities sales trading at China
Renaissance Securities, citing the uncertainty surrounding U.S.
elections and the resurgence of virus infections. While the
election and U.S. stimulus negotiations were a focus for investors,
"the bigger risk is actually on global economic recovery and what's
happening to Covid, especially looking at Europe right now," he
In Asia, major markets ended the day sharply lower. South
Korea's Kospi index dropped 2.6%. China's Shanghai Composite Index
fell 1.5%, Hong Kong's Hang Seng declined 2% and Japan's Nikkei 225
--Joanne Chiu in Hong Kong contributed to this article.
Write to Xie Yu at Yu.Xie@wsj.com
(END) Dow Jones Newswires
October 30, 2020 11:00 ET (15:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.