Dow drops 150 points, giving up Friday bounce; heads for worst week in 9 years

Dow drops 150 points, giving up Friday bounce; heads for worst week in 9 years

U.S. stocks were trading higher Friday, a day after both the Dow Jones industrial average and the S&P 500 fell into correction territory.

The Dow Jones industrial average rose about 180 points Friday morning, with Boeing and Apple leading the charge. The S&P 500 and the Nasdaq composite were both up roughly 0.8 percent, with utilities and information technology outperforming the broader market.

Alphabet, Microsoft and Facebook all traded more than 2 percent higher.

The Dow dropped 1,032 points Thursday, its second drop of that magnitude this week. As of Thursday’s close, the Dow was on track to post its largest weekly decline since October 2008.

The recent turmoil in equities began last Friday, when the Dow fell 666 points after a better-than-expected jobs report ignited inflation fears. That fall was exacerbated Monday after the yield on the benchmark 10-year Treasury note hit a 4-year high, sending the Dow tumbling another 1,175 points as investors grew more nervous about an overheating economy.

Trouble with securities called exchange-traded notes that decline in value when volatility increases likely helped create more turmoil in the markets this week.

“What’s happened here is an understanding that inflation is returning and that the central bank quantitative easing that we’ve grown accustomed to is coming to an end,” said Jim Bianco, head of the Chicago-based advisory firm Bianco Research. “Since the financial crisis, this is the first 10 percent correction in stocks that has not been accompanied by a significant fall in rates.”

Yields then backed off their multi-year highs, giving the Dow a 560-point bounce on Tuesday and relative stability on Wednesday. But between another round of strong economic news, hawkish comments from the Bank of England and an expensive government funding bill, yields rallied again, sparking Thursday’s sell-off.

The 10-year Treasury was slightly higher at 2.85 percent Friday. The note yield flirted with 2.885 percent Thursday, a 4-year high that sparked major equity sell-offs earlier in the week.

E-commerce giant Amazon wasn’t helping things either. The company is gearing up to launch a delivery service for businesses, pitting Jeff Bezos’s logistical prowess against carriers like FedEx and UPS, the Wall Street Journal reported early in the day.

Shares of UPS and FedEx were down 1.7 percent and 1 percent respectively.

Other stocks that have struggled this week include 3M, American Express and Exxon Mobil, down more than 10 percent as oil prices continue to slide.

While the week has certainly spooked many traders, several Wall Street strategists believe the recent volatility shouldn’t affect the rest of 2018.

“When the nervousness hit, a lot of people who were thinking of quitting hit the exits,” said Bruce McCain, chief investment strategist at Key Private Bank. “A lot of people want to let it settle out a bit and really make sure the worst has past … [but] for our standpoint on where we’ll be over the next year: We see no signs of recession.”

Progress on a government spending bill also made headlines on the week’s final day of trading. President Donald Trump signed a massive spending deal into law after both houses of Congress approved the bill early Friday morning.

Some liberal and conservative lawmakers resisted the plan, with Democrats demand immigration talks and Republicans worride about a ballooning national debt.

The passing of the bill likely helped keep stocks afloat, although investors were worried about what the deal would mean for the deficit.

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