Companies closed Friday’s session under pressure from mounting concerns about COVID-19 lockdowns across Europe, which increased fears of future limitations outside of Europe, putting pressure on blue chip stocks, oil, and the market at large.
The Dow dropped 200 points, or 0.6 percent, to its lowest level in three weeks and was down one percent for the week, while the S&P 500 saw a little daily gain. Nasdaq Composite, on the other hand, established a new high, boosted by rising technology stocks.
The Austrian government imposed a full lockdown beginning Monday in reaction to cases of COVID-19 increasing across Europe, causing market volatility. This lockdown is going to apply to both vaccinated and unvaccinated people and last at least 10 days but might be prolonged for another 10 days.
“The news is hitting European markets hard this morning as fears mount that the virus and restrictions will spread across the continent again,” said Jim Reid, Deutsche Bank chief economist, who added that “the curveball might be the United States,” based lower vaccine rates in the US than in Europe.
Furthermore, he also added that, “Although all the headlines are in Europe at the moment, will the US be more vulnerable than many European countries over the course of the full winter? Recent history suggests the US has a higher bar for economic restrictions related to COVID, but it also has a lower vaccination rate than their European peers.”
Stocks associated with “stay at home” trades, which defined much of 2020, bolstered the Nasdaq, delivering a brief boost to Zoom (ZM), Amazon (AMZN), and Netflix (NFLX). Moreover, Apple (AAPL) hit a new high during the period.
Rivian (RIVN), the new electric vehicle darling, came upon a story that Ford (F) was abandoning a plan to jointly build an EV with the automaker.
Treasury yields fell early Friday as buyers flocked to safe-haven assets, which had risen in reaction to mounting inflation fears. Brent crude (CL=F) fell almost three percent this week, owing to fears that energy consumption may be stifled by lockdowns, putting it on track for its lowest week in a year.
With regards to the strategic petroleum reserve, Goldman Sachs mentioned on Friday, “Just like with the headlines on Wednesday, we estimate that this move lower has far overshot the actual fundamental risks due to low trading volumes.”
Cannabis stocks, on the other hand, sustained a five-day losing trend as nationwide legalization efforts in the United States appeared to be faltering. Investors have become wary about the regulation shift that makes it legal under the present government in recent sessions.
ETFMG Alternative Harvest ETF (MJ), the largest fund tracking the marijuana business, has dropped to its lowest level since last year and is down 60% following the February high. However, marijuana stocks in the United States are falling behind: Horizons US Marijuana Index ETF (HMUS) shares are down 12% this week and are down 54% from their 52-week high in February.
Likewise, United Airlines (UAL), Delta Air Lines (DAL), and American Airlines (AAL), as well as cruise liners Carnival Corp (CCL) and Norwegian Cruise Line (NCLH), all lost at least one percent on the day as Europe’s COVID-19 woes reignited anxieties about leisure and travel.
With the holidays looming and the cold weather causing more people to congregate indoors, public health officials are trying to avoid another COVID outbreak this winter. The FDA approved boosters of the COVID-19 vaccinations from Pfizer/BioNTech (PFE, BNTX) and Moderna (MRNA) for all individuals on Friday. In addition, the CDC’s advisory council unanimously recommended booster doses from Pfizer (PFE) and Moderna (MRNA) for everyone aged 18 and up.
The US House of Representatives cleared President Joe Biden’s $1.75 trillion measure early Friday, but it is now going to be submitted to the Senate for further deliberations. This bill outlines the administration’s intentions for healthcare, education, and environmental protection.
In a report, Andrew Hunter, Senior US Economist at Capital Economics, stated, “The Build Back Better Act, which was passed by the House today, would provide only a small boost to economic growth next year.”