Stocks were flat on Friday to end a week that saw the broader market reach a record level. Concerns over the economy and a new coronavirus stimulus bill dampened market sentiment.
The Dow Jones Industrial Average traded just 38 points higher, or 0.1%. The S&P 500 hovered around breakeven along with the Nasdaq Composite.
House Speaker Nancy Pelosi, D-Calif. told PBS that both sides need to reach a deal on a more comprehensive stimulus package as millions struggle with being furloughed and unemployed amid the coronavirus pandemic. Pelosi’s comments come as Democrats and Republicans have been at a stalemate over additional unemployment benefits that expired last month. Democrats have indicated they want to reinstated the additional assistance at the original $600-per-week rate; Republicans have offered to extend the benefits at a lower rate.
The impasse comes as the U.S. economy tries to recover from the pandemic’s massive blow. The Labor Department said Thursday that initial weekly jobless claims came in above 1 million. On Wednesday, the Fed released the minutes from its July meeting that said the coronavirus pandemic “would weigh heavily on economic activity, employment, and inflation in the near term.”
Economic activity in Europe has also lost momentum. Data from IHS Markt showed the euro zone’s manufacturing and services PMIs both fell in August.
Record week on Wall Street
Earlier this week, the S&P 500 broke above its late-February high and notched a fresh all-time high. The Nasdaq Composite also hit a record on Thursday. The S&P 500 ended Thursday’s session up 0.4% for the week while the Nasdaq was up over 2% week to date.
The lion’s share of those gains has been driven by strong gains in Big Tech stocks. Apple is up nearly 3% this week and became the first publicly traded company in the U.S. to reach a market valuation of $2 trillion. Amazon and Alphabet have rallied over 4% this week and Microsoft is up 2.7% in that time.
“These are great companies and they are likely to continue to deliver solid earnings growth, but one has to wonder if there isn’t too much enthusiasm baked into their current stock prices,” said Brian Price, head of investment management at Commonwealth Financial Network. “It would be constructive for the overall health of the stock market if we started to see wider breadth and other sectors showing relative strength. We’ve had a few minor rallies in cyclical value-oriented sectors off the March lows but none that have been sustainable.”
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