Sunday, June 23, 2024

Stocks open higher on Wall Street a day after tech sell-off

by Associated Press

NEW YORK (AP) — Stocks are opening higher on Wall Street Friday, a day after a big slump in technology companies pulled the market to its biggest drop since June. The S&P 500 rose 0.4%. Traders were encouraged to see a drop in the unemployment rate last month, even as hiring slowed. Treasury yields rose after the government’s monthly jobs report came out, a sign that investors are becoming less pessimistic about the economy. The higher yields helped send bank stocks higher, since banks can lend money at higher rates once yields rise in the bond market. U.S. markets will be closed Monday for Labor Day.

European shares opened higher on Friday and U.S. futures bounced back after a day of losses in Asia.

Germany’s DAX gained 0.4% to 13,101.39 and the CAC 40 in Paris jumped 0.8% to 5,048.18. Britain’s FTSE 100 climbed 0.4% to 5,874.37. U.S. shares looked set for a comeback, with the future for the S&P 500 up 0.3% and that for the Dow industrials 0.5% higher.

There was little going on in Asia to alter the markets’ downward trajectory after the U.S. benchmark S&P 500 gave up 3.5% on Thursday, its biggest loss in three months, and the Nasdaq fell 5% as high-flying technology companies took a tumble after months of spectacular gains.

There seemed to be no obvious trigger for the sell-off, with economic data coming in roughly where the market had expected and no companies issuing foreboding warnings. But the market felt due for a breather, analysts said.

“Altitude sickness?” asked Riki Ogawa of Mizuho Bank. “To be sure, the plunge after overly exuberant rallies of recent was in itself not counter-intuitive; but the precise motivation of, and triggers for, market moves remains an enigma.”

There is still plenty of money sloshing through financial systems with the Federal Reserve and many other central banks unleashing massive amounts of cash through bond purchases, while keeping interest rates ultra low.

“While I don’t think its a healthy meltdown, getting rid of some of the short term speculator froth will offer up better levels for the Wall of Money to indulge as we know the Fed is not going anywhere soon,” Stephen Innes of AxiCorp said in a commentary.

The Nikkei 225 shed 1.1% to 23,205.43 while the Hang Seng in Hong Kong lost 1.3% to 24,095.45. Australia’s S&P/ASX 200 gave up 3.1% to 5,925.50 and the Shanghai Composite index slipped 0.9% to 3,355.37. South Korea’s Kospi lost 1.2% to 2,368.25.

Wall Street’s unloading of technology shares on Thursday ended with Apple plunging 8%. Amazon lost 4.6% and Facebook gave back 3.8%.

Investors have been betting those companies will keep making huge profits as people spend even more time online with their devices during the pandemic, making new market darlings of companies like Zoom Video Communications as many Americans work remotely and students do online learning.

Even with Thursday’s losses, Apple is still up 64.7% for the year, and Amazon is up 82.3%. Zoom’s gain for the year is still a whopping 460.4%.

The gains have been based on rosy assumptions about the virus’s impact on the economy, as well as on prospects for Congress and the White House coming up with another economic relief package.

Investors will be paying close attention Friday when the Labor Department releases its August job report. Economists surveyed by FactSet have forecast that the U.S. economy created 1.4 million jobs in August, down from 1.74 million jobs in July.

In energy trading, U.S. benchmark crude also rebounded, gaining 31 cents to $41.68 per barrel in electronic trading on the New York Mercantile Exchange. It lost 14 cents to $41.37 on Thursday. Brent crude, the international standard, added 33 cents to $44.40 per barrel.

The dollar was flat at 106.18 Japanese yen. The euro rose to $1.1862 from $1.1852.

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