Stocks came well off their lows on Friday but still registered a second straight day of losses, as the tide has turned away from tech for now.
The market utopia we’ve been enjoying cracked a bit in the past few days, leading to weekly losses for the formerly record-setting NASDAQ and S&P of approximately 3.4% and 2.4%, respectively. The Dow was down 1.9% in the five days.
But something had to give. Soaring more than 50% in 5 months is neither normal nor sustainable, which was why market watchers (including our editors) were getting a bit anxious at reaching new highs on an almost daily basis for the past few weeks.
It’s too bad this expected pullback overshadowed the big news on Friday, which was the unemployment rate moving to single digits for the first time in the pandemic era. According to the government employment situation, the rate fell to 8.4% in August from 10.2% in July.
Furthermore, the economy added 1.37 million jobs last month, which was slightly above expectations and should keep investors feeling pretty good even if the market sees more volatility moving forward.
The emphasis on Friday, though, was all about tech continuing to take a backseat. The NASDAQ dipped another 1.27% (or about 145 points) to 11,313.13, which adds onto yesterday’s nearly 5% plunge.
The FAANGs were all down by about 2% or more, except for Apple (NASDAQ:AAPL) squeezing out a 0.07% advance. The iPhone maker has been on quite a ride since its stock split, gaining 7% on Monday and Tuesday but losing 10% on Wednesday and Thursday.
Meanwhile, the S&P slipped 0.81% today to 3426.96 and the Dow was off 0.56% (or about 160 points) to 28,133.31.
However, the indices staged a nice comeback from a very negative morning, which had some market watchers wondering if there would be a repeat of Thursday. At one point, the Dow plunged approximately 630 points.
So it looks like September may live up to its reputation as a rough time for stocks after all. What will the rest of the month have in store for us?
Let’s worry about that when we get back from this three-day weekend...
Today's Portfolio Highlights:
Marijuana Innovators: With the House expected to vote on the MORE Act this month, David wanted to add a Canadian grower with potential US lines of business. Therefore, he added Canopy Growth (NYSE:CGC) on Friday. This Zacks Rank #2 (Buy) offers dry cannabis and oil products primarily under the Tweed brand. Make sure to read the editor’s complete commentary for a lot more on this new addition.
Home Run Investor: A strong quarterly report from Domo (NASDAQ:DOMO) helped this stock become the best performer of the day despite the market slide. This enterprise software company beat on both the top and bottom lines for its fiscal second quarter. DOMO now expects full-year revenue between $202.2 million and $206.5 million. The stock was up 8.05% on Friday. DOMO is now the third-biggest winner for Home Run with a rise of more than 83% since being added on May 15.
Counterstrike: "The liquidation continued today as the Nasdaq broke its 21-day MA and we saw a real nice flush. We haven’t seen this kind of selling in a while and its nice to finally see the froth come off. While I wish the move lower wasn’t the elevator down type, it was needed.
"The Nasdaq traded the bottom end of the trend lone from march and almost kissed the 50-day. From there, we bounced nicely, but couldn’t rally back into the green. This tells us that perhaps we need more digestion.
"I hope my pounding the table on the need for a pullback made you guys cautious enough to either hedge or set some trailing stops.
"Next week there will be great opportunity for us. The work I did on the charts last week will now pay off as my setups come into play. This is why we are patient, but that time is over. Next week we get aggressive." -- Jeremy Mullin
Value Investor: "We've finally gotten a pullback in stocks. It was long over due. As I've said over and over the past few weeks, pullbacks are healthy in bull markets. In fact, you should root for them.
"Now what?
"A pullback is normally 3-5%. The NASDAQ is already at 3%. But it was up over 80% heading into this pullback. This might not be enough to wipe the speculation out of this rally.
"The Robinhood Traders are now "believers" in their growth stocks. Many believe they only go up. More pain may be coming until some of the weak hands throw in their cards." -- Tracey Ryniec
Have a Great Labor Day Weekend!
Jim Giaquinto
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