The broad equity benchmark declined 0.3%, the Nasdaq added 0.1%, and the Dow Jones Industrial Average shed 0.6%
The S&P 500 fell slightly on Friday, retreating from record levels, while the strength in major technology names pushed the Nasdaq Composite to another all-time high.
The broad equity benchmark dipped 0.3% to 3,841.47 after closing at a record in the previous session. The Nasdaq rose 0.1% to another record close of 13,543.06, supported by Big Tech. The Dow Jones Industrial Average slid 179.03 points, or 0.6%, to 30,996.98.
Dow-component IBM dropped 9.9% after the company reported fourth-quarter sales below analysts’ expectations. Revenue fell 6% on an annualized basis, the fourth consecutive quarter of declines. Intel shares retreated 9.3% following a 6% rise on Thursday after it released better-than-expected earnings.
Hopes for a robust earnings season from the largest communications and tech companies sparked a rally in mega-cap stocks during the holiday-shortened week, pushing the broader market higher. The Nasdaq climbed 4.2% this week, while the S&P 500 and the Dow gained 1.9% and 0.6%, respectively.
Apple rose another 1.6% Friday, bringing its weekly gain to 9.4%. Facebook and Microsoft also rallied 9.2% and 6.3%, respectively, this week. These big tech companies are scheduled to report earnings next week.
Unlike earlier this month, this week’s rally has been led by growth stocks and mega-cap tech names, Mark Haefele, chief investment officer at UBS, said in a note. Netflix’s “strong results and plans to return cash to shareholders supported a rally in the other FAAMNGs ahead of their forthcoming earnings releases.”
Investors reassessed the outlook for President Joe Biden’s ambitious Covid stimulus plan. A growing number of Republicans have expressed doubts over the need for another stimulus bill, especially one with a price tag of $1.9 trillion proposed by Biden. Meanwhile, Democratic Sen. Joe Manchin has criticized the size of the latest round of proposed stimulus checks. Dissent from either party carries weight for Biden, who took office with a slim majority in Congress.
The political reality of Washington is starting to impact markets, and it’s becoming more unclear when Democrats’ ambitious stimulus goals will become law, said Tom Essaye, founder of Sevens Report.
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