After the bad start of the week, the US markets extended loses on Friday, finishing the session on red territory after the shares of the technology giants reported a further decline. Facebook and Apple were again the worst performers.
The blue-chip index Dow Jones Industrial Average wiped out 178.74 points, reaching value of 24,285.95 points. The broader S&P 500 dropped by 0.65% to 2,632.56 points, while the technology index Nasdaq Composite slid by 0.5% and closed the session at 6,938.98 points. Thus, stock indexes log worst Thanksgiving week since 2011.
The technological giants, also known as FAANG (Facebook, Amazon, Apple, Netflix and Google), fell by at least 5.7% from on Friday.
Apple is at the forefront of red session, decreasing by nearly 2.5%. The decline came after information that the company plans to lower prices for iPhone XR in Japan because sales are not satisfactory. Since the beginning of the year Apple shares have collapsed by 25%.
According to the analysts, the technological stocks are again under pressure, but more worrying is that oil prices are collapsing. The low oil prices are not a good sign of the economy.
The Friday session ended early due to the Thanksgiving holiday.
Wall Street weekly market wrap
The major Wall Street indexes extended the loses for third consecutive week. The blue-chip index Dow Jones Industrial Average wiped out 4.4% to 24,285.95 points. The broader index S&P 500 decreased by 3.8% during the week to 2,632.56, while the technology Nasdaq Composite dropped by 4.3% to 6,938.98 points.
According to Dow Jones Market Data, this week’s performances for all three major indexes marks their worst Thanksgiving weeks since 2011.
However, the trading activity on the Wednesday before Thanksgiving and the Friday afterward is usually a fraction of what it is during normal, non-holiday trading periods. The average trading volumes since 2010 on the day before and after Turkey day, per Dow Jones Market Data, is as least 25-30% less than average for the year.
For bond traders, the Securities Industry and Financial Markets Association recommend a 2 p.m. close on Friday, one hour earlier than usual.
The Black Friday kicks off the holiday season, which is usually strong for retailers and major technology companies.
The stock market’s recent slump didn’t seem to affect consumers’ enthusiasm on holiday spending. For online orders alone, shoppers spent about 1.75 billion USD by 5 p.m. on Thanksgiving Day, a 28.6% increase from a year ago, according to Adobe Analytics, which tracks transactions from 80 of the top 100 US online retailers.
But that’s nothing compared with what’s coming this weekend. Black Friday is expected to produce 24 billion USD n sales, according to research firm Customer Growth Partners, and that total will climb to about 60 billion USD through Sunday.
The strong shopping season will definitely calm the situation among the major retailers and technology giants, but definitely the high goals and targets set by them, can cause some turmoil on the markets.
Trading and earning reports this week was mainly focused on retailers and department store companies. During the week were published the finance statements of consumer electronics retailer Best Buy, Target Corporation, Lowe’s and Kohl’s. Most of them suffered serious problems during the quarter with revenues and earnings not as impressive as it first seems.
The revenue growth of Lowe’s beats by nearly 4% anticipated sales by roughly 75 million USD. However, this was helped by the adoption of the new revenue recognition standard, which provided a 143 basis point benefit to sales growth. Meanwhile, the comps growth came in at 1.5%, falling behind expectations. The earnings growth was primarily a result of the reduction in the tax rate, since the gross and operating margins of the company continue to slide. The company was unable to match the performance posted by its closest competitor – Home Depot.
Target Corporation reported Tuesday with third-quarter results that disappointed investors and sent the stock tumbling. Now that shares are on track for their roughest patch since the financial crisis. The retailer missed third-quarter results with earnings climbed 20% to 1.09 USD per share, while revenue climbed 5.5% to 17.59 billion USD.
The consumer electronics retailer Best Buy beat Wall Street’s targets for its fiscal third quarter. But it came up short with its holiday-quarter outlook and its stocks fell in early trading, then rebounded for a modest gain.
On other hand airlines were winning during the week. Airline stocks grew during the one of the busiest travel weeks of the year. There doesn’t appear to be a single catalyst, but the lower overall level of jet fuel prices compared to a few months ago supports their outlook. Some non-US airlines posted their finance statement for the quarter with El Al Israel Airlines and LATAM Airlines Group having strong outlook for the holiday season.