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Market Snapshot: Nasdaq rises, Dow falls as U.S. stocks trade mixed amid COVID-19 jitters

U.S. stock indexes were mixed heading toward the closing bell Friday, with the Dow Jones Industrial Average trading down amid growing concerns over rising cases of COVID-19 in the U.S. and Europe, while the technology-laden Nasdaq Composite showed gains as bond yields fell.

How are stock benchmarks trading?

The S&P 500 index

slipped 3.5 points, or 0.1%, to 4,701.

The Dow Jones Industrial Average

fell about 247 points, or 0.7%, to about 35,624, dragged lower by declines in Boeing Co.

and UnitedHealth Group Inc.

The Nasdaq Composite Index

rose almost 67 points, or 0.4%, to 16,060, after establishing an intraday record at 16,102.72, FactSet data show.

The larger-cap Nasdaq-100 index

was up 0.5%, with the advance powered by share gains in Intuit Inc.

and Micron Technology Inc.

For the week, the Dow is headed for a 1.3% decline, while the S&P 500 is on track for a 0.4% gain and the Nasdaq Composite is poised to advance 1.3%.

On Thursday, the Dow closed down 60.10 points, or 0.2%, at 35,870.95, the S&P 500 rose 0.3% to end at a record 4,704.54 and the Nasdaq Composite climbed 0.5% to finish at a record 15,993.

What’s driving the market?

Large-capitalization technology stocks were helping deliver a fillip to a market that has otherwise been stricken by renewed angst COVID-19 angst.

“There’s a little bit of malaise around COVID,” said Tony Roth, chief investment officer at Wilmington Trust, in a phone interview Friday. “Europe is having a lot of problems right now,” raising concerns that a similar spike in COVID infections could follow in the U.S.

That has prompted investor interest in the “stay-at-home trade,” including technology stocks, and areas of the market that tend to fare better in a lower interest-rate environment such as growth equities
according to Roth. By contrast, travel-oriented stocks “are not doing so great today in the market,” he said.

Some investors suggest that bearish news on rising cases of the infectious disease are being used as an opportunity to lighten exposures, headed in a seasonally thinly traded period of the U.S. Thanksgiving week holiday on Thursday.

An announcement of a 20-day nationwide COVID lockdown by the Austrian government spooked stock markets and sparked buying in government safe-haven bonds on Friday.

COVID developments in Europe are “unsettling markets today” as many investors had probably assumed lockdowns were “behind us,” according to Seema Shah, chief strategist at Principal Global Investors. “It’s a growth concern,” explained Shah, who is based in London, told MarketWatch by phone Friday.

Austria’s lockdown will include both those vaccinated and unvaccinated, with movement for the latter having been restricted over the past week. The news from Vienna comes as Germany’s health minister on Friday said that lockdowns couldn’t be ruled out in his country, with record cases this week in Germany and Austria.

“I think we’re seeing a knee-jerk reaction to Austria’s lockdown announcement that’s more a reflection of fear than reality,” said Craig Erlam, senior market analyst at OANDA, in emailed comments. “Other countries like the U.S., U.K. and others will be very reluctant to impose such measures again and will likely adopt a lighter touch, if necessary, and unless unavoidable.”

In the U.S. cases have been rising in the Upper Midwest, with a busy travel season about to begin ahead of next Thursday’s Thanksgiving holiday. Also, the daily case count topped 100,000 for a second straight day on Thursday, with the seven-day average rising to a six-week high of 94,669, according to a New York Times Tracker.

The reports of rising infections pushed down oil prices on fears of a fall in demand resulting from COVID lockdowns. West Texas Intermediate crude

slumped 3.7% to settle at $76.10 a barrel.

U.S. markets will close for the Thanksgiving holiday next Thursday, with a shortened session of trading next Friday.

A number of analysts have expressed bullishness about equities, despite a wall of worry, which includes concerns about inflation and the pace of interest rates hikes by the Federal Research.

“The real risk is inflation,” said Roth, “not a lack of economic activity because of COVID.” Roth said he remains “pretty optimistic” about growth in the U.S. partly due to the availability of booster shots for COVID-19 vaccines.

On Friday, Fed Gov. Christopher Waller said the central bank may need to pivot to a faster tapering of its bond purchase program based, in part, on high inflation readings, in a speech to the Center for Financial Stability. Waller described the high inflation seen this year as a “big snowfall that will stay on the ground for a while” rather than a one-inch dusting.

However, investors have appeared eager to buy through the concerns about pricing pressures and eventual policy tightening.

“Buy any dip in the next two weeks and be positioned for a bullish couple of months to follow,” the founder of asset-management firm Navellier & Associates, Louis Navellier, advised clients in a note Thursday.

“Expectations were that interest rates would rise and punish growth stocks more than value stocks from a compression of P/E multiples,” he said. “Most likely now is a consolidation phase, with a bias to companies with strong cash flows, and then a sprint by growth names into year-end with a follow-through into traditionally risk-on January.”

Read: Should stock-market investors who ‘missed the rally’ buy now? Here’s what UBS says

Markets are also waiting for President Joe Biden to nominate who will head the central bank after Jerome Powell’s term finishes in February. Markets expect Biden will either renominate Powell or Fed Gov. Lael Brainard.

The uncertainty is “very much hanging over markets right now,” said Roth, who worries that Brainard might be “so dovish” as to increase the potential for a policy mistake by waiting too long to hike rates against the backdrop of elevated inflation.

Read: Why banks prefer Brainard over Powell to lead the Fed

Elsewhere, House Democrats passed Biden’s $1.85 trillion social spending agenda, after plans for a Thursday evening vote were delayed by a nearly four-hour speech by Minority Leader Kevin McCarthy. The bill must now be approved by the Senate.

Which companies are in focus?

Intuit Inc.

shares jumped 9.2% after the software company raised its annual guidance while integrating recent acquisitions.

Evercore ISI’s C.J. Muse elevated Micron

and Lam Research Corp.

 to his firm’s “top picks” list Friday, arguing that both could benefit from the “green shoots” he’s seeing in the memory industry. Shares of Micron rose 8.4%, while those for Lam were up 1.5%.

Shares of Walmart IncWMT fell 0.6%, after MKM Partners analyst Bill Kirk said the discount retail giant is “doing the most, but getting the least credit.”

Shares of Foot Locker IncFL plunged 11.6%, even after the athletic shoe and apparel retailer reported Friday fiscal third-quarter adjusted profit and sales that rose above expectations, while cost of sales fell, and said it was “ready” for the holidays despite the supply chain issues. 

KinderCare Learnings Companies IncKLCsaid it will postpone its initial public offering, citing regulatory delays. 

Shares of Workday Inc. WDAY were off 3.7% after the software company reported fiscal third-quarter results that surpassed Street estimates, named Barbara Larson as new chief financial officer, and its intention to acquire VNDLY, a cloud-based vendor-management software company. 

Nike Inc. NKE said late Thursday that its board of directors has approved a 11% dividend increase to 30.5 cents a share. Its shares climbed 2.4%.

Shares of Sweetgreen Inc., which recently made its debut as a publicly traded company, were up 5.5% Friday afternoon. The California-based operator of health-driven restaurants saw its stock surge on Thursday.

How are other assets faring?

The yield on the 10-year Treasury note TMUBMUSD10Y fell Friday about 5 basis points to 1.535%. Yields and debt prices move in opposite directions.

The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.5%, trading around its highest level since July 2020.

Gold futures GC00 ended 0.5% lower to settle at $1,851.60 an ounce , with the precious metal hemmed in partially by the dollar’s rise.

The Stoxx Europe 600 SXXP retreated 0.3% and posted a 0.1% weekly slide, while London’s FTSE 100 UKX finished the session down around 0.5% for a weekly decline of 1.7%.

In Asia, the Shanghai Composite SHCOMP rose 1.1% to gain 0.6% on the week, while the Hang Seng Index HSI declined 1.1% in Hong Kong, notching a 1.1% decline for the week, and China’s CSI 300

rose 1.1% to help it finish about flat for the week, and Japan’s Nikkei 225 NIK rose 0.5% on the session Friday for a 0.5% weekly gain.

–Barbara Kollmeyer contributed to this report.

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