A bit of good news flew in from the stock market when Wall Street saw streaming gains this Friday. Tech shares and shares in healthcare companies increased considerably after the long-drawn September swoon in the stock market department. However, despite such a gain, the S&P 500 posted about its fourth consecutive weekly loss making it an unpleasant time for Wall Street.
September has been erratic on the stock market front. There was a 1.66% rise in S&P 500 earlier this month. However, this resulted in a new high to start this month but the stocks fell sharply as the value of several tech shares rose too high, according to investors.
The stock market’s monthly swoon comes after several years. The benchmark index ended at 0.6% loss at the end of the week making it a consecutive four-week losing streak in over a year. The S&P 500 index rests at 5.8% currently, for September, after five months of continuous profits.
During Friday Gains Investors “Step In To Buy The Dip”
The S&P 500 index stood at a 10% drop after the impressive high this week. This is in striking contrast to what the Friday tech shares showed. Wall Street calls this phenomenon a correction.
David Lyon, J.P. Morgan Private Bank global investment specialist clarifies that the stock market boom that happened on Friday was a reflection of investors participating in the selling to buy stocks at a lower price. The market is experiencing a 10% correction at the moment that resulted in the buying spree.
Tech Shares Lead Friday’s Stock Market Gains
The S&P 500 index rose to 3,298.46. The Dow Jones Industrial Average rose to 27,173.96 (or 1.3%). The Nasdaq composite rose to 10,913.56 (or 2.3%). Smaller stocks have also gained during the Friday stock market boom.
This sudden stock market gain happened because of several factors, according to stock analysts. The most crucial factor among them is that tech shares and other stocks were getting too expensive. Throughout the summer, these stocks made record-breaking gains which resulted in the tremendous rise in the cost of these stocks in particular. For example, Big Tech stocks rose too high even amidst the coronavirus pandemic that has weakened the economy to a great extent.
September Named The “Give-Back Month”
David Lyon further mentions that this month is really a “give-back month”. The valuations of stocks became very expensive, explains Lyon, so it is only natural that the market settled in this way with a kind of giving back of some of those returns in advance.
Tech shares of Apple, Microsoft and Big Tech recovered from the early-September slide. Apple rose 3.8%, Microsoft gained 2.3% and the parent company of Google added 1.1%.
Cruise Line shares also notched a profit as per the S&P 500 index. Norwegian Cruise Line gained a whopping 13.7%. Carnival rose 9.7% and the Royal Caribbean Group added 7.7%.
With the second coronavirus stimulus plan still not in place and the inability of Capitol Hill to come to the aid of investors, the stock market is still suffering immensely from the pandemic impact, mentions stock experts.
