NEW YORK (AP) — Stocks are tumbling again Friday as Wall Street closes out a punishing week and its first back-to-back monthly loss since worries about the pandemic first peaked in March.
The S&P 500 was 1.7% lower in morning trading, putting it on pace for a 6.1% loss for the week, which would be its worst since March. It’s also on track for a 3.2% drop for October. The Dow Jones Industrial Average was down 388 points, or 1.5%, at 26,270, as of 11 a.m. Eastern time, and the Nasdaq composite was down 2.6%.
Worries about whether expectations built too high for some of the stock market’s biggest stars helped drive the losses. They piled on top of fears that built earlier this week about the economic damage coming due to surging coronavirus counts around the world, uncertainty surrounding the upcoming presidential election and Washington’s inability to provide more support for the economy.
Apple, Amazon, Facebook and Google’s parent company are four of the five biggest stocks in the S&P 500 by market value, which gives their movements outsized sway on the index, and they were principal forces driving Wall Street’s huge rally since March. All four reported profit for the summer that was even better than analysts were expecting, just like the other stock in the Big Five did earlier this week. But also like Microsoft, most nevertheless fell as investors found reasons for concern within their reports.
Apple dropped 5.4% after investors focused on weaker revenue than expected for its iPhones and sales in China. Amazon fell 3.9%, and Facebook lost 6.1%.
Twitter, another high-profile tech stock, slumped 19.8% for the largest loss by far among stocks in the S&P 500. It also reported better-than-expected earnings for the latest quarter. Investors were focusing instead on its growth in daily users, which fell short of analysts’ expectations.
Google’s parent company, Alphabet, was an outlier and rose 3.9% after reporting growth in digital ad spending.
A similar trend has been occurring across the market: Stocks are not getting the bounce they usually do after reporting better-than-expected results. And they’ve been giving investors plenty of opportunities to do so: With nearly three quarters of the S&P 500 by market value having reported, 84% of companies have beat expectations, according to Credit Suisse.
So far, companies reporting both revenue and earnings above Wall Street’s forecasts have been getting only one-eighth the boost as they have historically, in terms of their stock performance versus the rest of the market, according to Jonathan Golub, chief U.S. equity strategist at Credit Suisse.
Analysts say that’s an indication that expectations may have built too high through the market’s big rally and that investors’ attention may simply be elsewhere given all the uncertainties sweeping the market.
Instead of earnings reports for the last three months, much of the market’s focus has been on what’s to come for the economy when coronavirus counts are rising at a troubling rate across Europe and the United States.
Several European governments have already brought back restrictions on businesses to slow the spread of the virus. Even if the heaviest restrictions don’t return in the United States, the worry is the worsening pandemic will nonetheless drive customers away from businesses and undercut their profits.
At the same time, Washington has been unable to deliver more aid to the economy. Investors and economists have been lobbying for Congress and the White House to renew supplemental benefits for laid-off workers and other stimulus following the expiration of the last round of stimulus approved earlier this year.
On Thursday, though, Democrats and Republicans again blamed the other side for holding up a deal.
In markets around the world on Friday, caution was still continuing to dominate. But the moves were not as violent as earlier in the week.
A measure of fear in the U.S. stock market, the VIX index, flipped between small gains and losses before rising 4.7%. The yield on the 10-year Treasury ticked up to 0.84% from 0.83% late Thursday.
In European stock markets, France’s CAC 40 fell 0.1%, and Germany’s DAX lost 0.9%. The FTSE 100 in London slipped 0.6%.
In Asia, the Nikkei 225 fell 1.5%, South Korea’s Kospi lost 2.6% and the Hang Seng in Hong Kong dropped 1.9%.
Stocks in Shanghai sank 1.5%. China’s ruling party said Thursday its next five-year development plan will emphasize self-reliance in technology.