Dow falls 400 points as Wall Street wraps up its worst week and month since lockdowns began in March

Stocks tumbled again Friday with the Dow Jones Industrial Average closing 157 points lower and posting its biggest weekly losses since March.  

Wall Street is closing out a punishing week with all three major indexes in the red, dragged down by a slide in shares of tech heavyweights following their quarterly results.

The Dow had earlier dropped by more than 500 points before a quick climb back just before the markets closed.  

The S&P 500 also gave back 1.2 percent, sealing back-to-back weekly losses and the second straight losing month for the benchmark index since March.   

It will be the market’s first back-to-back monthly loss since worries about the pandemic first peaked early in the year.  

The messy week comes just four days before the US election, as coronavirus cases soar, a second round of lockdowns grip Europe, and uncertainty about a further stimulus deal dash hopes of a speedy global economic recovery.  

Wall Street is closing out a punishing week with all three major indexes in the red. Pictured, a specialist on the trading floor at the New York Stock Exchange on Wednesday

The Dow dropped after opening Friday by over 500 points before slowly climbing back. It 1closed 57 points lower and posted its biggest weekly losses since March

The Dow dropped after opening Friday by over 500 points before slowly climbing back. It 1closed 57 points lower and posted its biggest weekly losses since March

The Dow and S&P 500 fell 6.5 percent and 5.6 percent respectively this week, according to CNBC, both their biggest weekly losses since March. 

The Nasdaq closed down 270 to 10,911.59. 

It lost more than 5 percent over that this week and also had its worst one-week performance since March. 

The Dow, S&P 500 and Nasdaq also all posted their first back-to-back monthly losses since March. 

‘Markets are concerned that we are replaying February and March,’ Chris Beauchamp, chief market analyst at IG Group, told the Wall Street Journal

‘It probably still isn’t in that category yet, but it is heading in the wrong direction.’ 

The S&P 500 also gave back 1.2 percent, sealing back-to-back weekly losses and the second straight losing month for the benchmark index since March

The S&P 500 also gave back 1.2 percent, sealing back-to-back weekly losses and the second straight losing month for the benchmark index since March

The Nasdaq closed down 270 to 10,911.59. It lost more than 5 percent over that this week and also had its worst one-week performance since March

The Nasdaq closed down 270 to 10,911.59. It lost more than 5 percent over that this week and also had its worst one-week performance since March

 

Much of the market’s focus Friday was on Apple, Amazon, Facebook and Google’s parent company, Alphabet. 

They are four of the five biggest stocks in the S&P 500 by market value, which gives their movements outsized sway on the index, and they were principal forces behind Wall Street’s huge rally since March.

All four reported profit for the summer that was even better than analysts were expecting, just like the other stock in the Big Five did earlier this week. 

But also like Microsoft, most nevertheless fell as investors found reasons for concern within their reports.

Apple dropped 5.5 percent after investors focused on weaker revenue than expected for its iPhones and sales in China. Amazon fell 4.9 percent, and Facebook lost 6.7 percent. 

Twitter, another high-profile tech stock, slumped 20.6 percent for the largest loss by far among stocks in the S&P 500. 

The Dow has suffered a brutal week, potentially its worst since lockdowns in March

The Dow has suffered a brutal week, potentially its worst since lockdowns in March

This could also be the worst month the Dow has faced since March

This could also be the worst month the Dow has faced since March

It also reported better-than-expected earnings for the latest quarter. Investors focused instead on its growth in daily users, which fell short of analysts´ expectations.

‘The big tech earnings were not that bad but markets did not respond positively, so that does suggest a deeper sense of negativity in the market,’ Seema Shah, chief strategist at Principal Global Investors, said to the WSJ. 

Alphabet was an outlier and rose 3.6 percent after reporting growth in digital ad spending.

‘There is a big selloff in those big tech names because they didn’t live up to the hype and people are really worried about next week’s election,’ Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh, told Reuters. 

Much of the market’s focus has also been on what’s to come for the economy when coronavirus counts are rising at troubling rates across Europe and the United States.

This week has seen global coronavirus cases rise by over 500,000 for the first time, with France and Germany preparing fresh lockdowns. 

Much of the market's focus Friday was on Apple, Amazon, Facebook and Google's parent company, Alphabet. Pictured, the New York Stock Exchange earlier in October

Much of the market’s focus Friday was on Apple, Amazon, Facebook and Google’s parent company, Alphabet. Pictured, the New York Stock Exchange earlier in October

Several European governments have already brought back restrictions on businesses to slow the spread of the virus. 

Even if the strictest lockdowns don’t return in the US, the worry is the rising death toll due to the pandemic will nonetheless drive customers away from businesses and undercut their profits.

At the same time, Washington has been unable to deliver more aid to the economy. 

That’s despite investors and economists saying it’s sorely needed following the expiration of supplemental benefits for laid-off workers and other stimulus approved by Congress earlier this year.

‘The Fed is saying this, the market is saying this, and most economists are beginning to adjust their fourth quarter forecasts with the expectation that growth without stimulus is going to be hard to achieve, especially as COVID-19 cases seem to set new daily records each day,’ said Kevin Giddis, chief fixed income strategist at Raymond James.

On Thursday, though, Democrats and Republicans again blamed the other side for holding up a deal.

There will now be no further movement on the stimulus front until the election is over and the winner is decided.  

Data on the economy recently has been coming in mixed, following its initial burst after coming out of its coronavirus-induced coma. 

Reports on Friday showed that personal incomes and consumer spending in the country rose more than expected last month.  

According to CNN, the University of Michigan’s consumer sentiment survey for October came in just above expectations. 

It showed that personal spending rose even as incomes dropped, suggesting that Americans are dipping into their savings to spend.

Savings rates shot up earlier this year as people stayed at home. 

The Commerce Department also revealed that US households spent more in September, although the pace of the gains has fallen, according to the Wall Street Journal.  

But economists warned it’s unclear whether the momentum can continue if the worsening pandemic leads to more business closures and layoffs. 

Earlier in the week, third-quarter numbers for gross domestic product growth exceeded expectations.  

GDP,  the broadest measure of economic activity, remains far before its pre-pandemic level, however.