Stock indexes tested Thursday’s lows in the overnight session before bouncing Friday morning, but overall there was not much changed as stocks and index ETFs were on target for a month of consecutive losses.
While tech stocks have been attempting a rally after dipping earlier, leisure stocks that stand to benefit from positive coronavirus developments such as Carnival, Norwegian Cruise Line, and Royal Caribbean gained 4.2%, 8.9% and 3.8%, respectively after receiving an upgrade from Barclays.
For the week, the Dow started Friday’s session off by 3% while the S&P 500 had fallen 2.2%. The Nasdaq Composite has lost 1.1% week to date, in what has been the longest weekly drop in more than a year. Analysts are still concerned that the correction may not be over yet.
The “sell-off has stabilized a bit over the last few days, but there are still no real signs of strength,” said Mark Newton, managing member at Newton Advisors, in a note. “Thus, the trend remains bearish and not much to bet on a rebound.”
The S&P 500 has tumbled over 7% in September, while the Dow Jones has fallen 5.7%, and the Nasdaq sank 9.4% month to date, falling into correction territory as well, as tech stocks encountered strong headwinds following their bounce off the lows.
Now pundits like Russ Koesterich, managing director and portfolio manager at BlackRock, are reshuffling their portfolios from tech stocks to cyclicals to take advantage of the current environment.
“What we’ve been trying to do in recent weeks is take the cyclical exposure up a little bit … it’s not that we think tech is going to roll over. We still like the themes. But on a shorter-term tactical basis, we’re comfortable with the economy, we think we’re going to continue to see improvement, and we’re looking for names that are levered to that improvement,” Koesterich said on CNBC “Closing Bell.”
Investors are also still on edge as House Democrats are prepping a $2.4 trillion relief package which would include enhanced unemployment benefits and assistance for airlines, but the overall cost remains high and is still a source of contention with Republican leaders.
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