Stocks Bounce Off Lows but End Down as Tech Continues to Slide

The S&P 500 and Nasdaq end their five-week winning streaks.
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Stocks ended down in wild trading Friday ahead of the Labor Day holiday week as some of the biggest names in tech continued to slide.

The Dow Jones Industrial Average, which turned briefly positive Friday, ended down 159 points, or 0.56%, to 28,133, the S&P 500 fell 0.81% and the Nasdaq fell 1.27%. 

Microsoft  (MSFT) - Get Report, Amazon  (AMZN) - Get Report and Facebook  (FB) - Get Report all ended lower Friday. Apple  (AAPL) - Get Report finished slightly higher. 

The S&P 500 and Nasdaq ended their five-week winning streaks.

“Certainly, wide price swings are never comfortable, but investors should keep in mind that periods of volatility like this are not uncommon,” said Mike Loewengart, managing director of investment strategy at E*Trade.

U.S. companies added to their ranks in August, pushing the unemployment rate below 10% for the first time since the coronavirus pandemic began in March, though the economy is still out about 11.4 million jobs since the pandemic was first declared.

“What a week, from new highs to many stocks down double digits,” said LPL Financial Chief Market Strategist Ryan Detrick. “The truth is stocks were historically overbought in some cases, so this pullback is perfectly normal and probably healthy.”

Nonfarm payrolls rose by 1.371 million last month, down from a revised 1.763 million new positions in July but below analysts' forecasts of 1.4 million, the U.S. Bureau of Labor Statistics reported on Friday. The unemployment rate fell to 8.4% from 10.2% last month, better than analysts' forecasts of a drop to 9.2%.

"The market should view these numbers as positive and while we may continue to see a correction in the technology and technology-related stocks, there are still plenty of opportunities in companies that were more adversely impacted by the pandemic and are continuing to improve," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

"The sizeable drop in the unemployment rate is encouraging and better than expected," said Luke Tilley of Wilmington Trust. "It reflects the continued rehiring of workers who were temporarily let go during the shutdowns and continue to be hired back."

Stocks declined the most since early June on Thursday as tech shares - the darlings of the recent rally - slumped sharply.

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The Dow fell 811 points, or 2.8%, to 28,290, the S&P 500 slid 3.5% and the tech-heavy Nasdaq dropped 5%.

“Putting (Thursday's) market pullback in context, this takes the S&P 500 all the way back to where it was - wait for it - last Wednesday," said Greg McBride, Bankrate.com's chief financial analyst. "Markets go up and down, not just up as we’ve seen lately. Volatility is normal and investors should be braced for more of it as we head closer to the election, and with valuations at high levels.”

Before Thursday's rout, the S&P 500 had risen nine out of the previous 10 sessions.