Stocks post solid gains
NEW YORK (AP) — Stocks shook off another bout of volatile trading and finished solidly higher Friday, led by gains in technology and health care companies. Despite the rally, the S&P 500 still posted its fourth straight weekly loss, extending Wall Street’s September swoon.
The S&P 500 rose 1.6% after flip-flopping between small gains and losses a few times in the early going. Stocks have been erratic this month, with indexes setting new highs to start the month and then falling sharply as investors worried that values for some of technology giants had risen too high.
The benchmark index ended the week with a 0.6% loss for its first four-week losing streak in more than a year. The index is now down 5.8% for September, following five straight months of gains.
The S&P 500 came within striking distance of a 10% drop from its all-time high earlier this week, what Wall Street calls a correction. Friday’s gains reflect, in part, traders taking advantage of the selling to snap up stocks at lower prices, said David Lyon, global investment specialist at J.P. Morgan Private Bank.
“You’re getting a market that got close to a 10% correction, so you’re starting to see buyers step in to buy the dip,” Lyon said.
Fund managers also tend to make moves toward the end of a quarter to bolster their portfolios, another reason for the end-of-the-week buying spree, he said.
The S&P 500 rose 51.87 points to 3,298.46. The Dow Jones Industrial Average gained 358.52 points, or 1.3%, to 27,173.96. The Nasdaq composite climbed 241.30 points, or 2.3%, to 10,913.56.
Smaller stocks also notched gains. The Russell 2000 index of small-cap stocks picked up 23.09 points, or 1.6%, to 1,474.91.
Stocks have struggled this month amid a long list of concerns. Chief among them is that stocks may have gotten too expensive following their record-breaking run through the summer, after storming 60% higher. Critics say Big Tech stocks in particular rose too high, even after accounting for their tremendous growth even as the coronavirus weakened the economy.
“This week, and the month of September, is really what we’re calling the give-back month,” Lyon said. “(Stock) valuations got expensive and this is a natural settling of the market, kind of giving back some of those advance returns that were probably ahead of themselves.”
Big Tech stocks recovered from an early slide. Apple gained 3.8%, Microsoft rose 2.3% and Google’s parent company added 1.1%.
Traders also bid up shares in cruise lines. Norwegian Cruise Line notched the biggest gain in the S&P 500, vaulting 13.7%. Carnival jumped 9.7% and Royal Caribbean Group climbed 7.7%.
Recently, investors’ frustration has also grown with the inability of Congress to deliver more aid to the economy after weekly unemployment benefits and other stimulus expired.