Market bounces well of lows in volatile day

Market bounces well of lows in volatile day

Stock markets extended losses on Friday after technology stocks plunged the day before, overshadowing generally positive news about job numbers in the US and Canada.

The bank index helped offset tech's woes, with Spanish banks Bankia and Caixabank both marking double-digit gains earlier in the session after they said they were considering a merger to create the biggest lender in Spain.

The worst of Friday's selloff appeared to stem from concern that the recent run-up in tech shares wasn't tied to broad investor sentiment, but instead was driven by outsize options trades from one firm.

That said, the market felt due for a breather, investors said.

On Wednesday, the Dow surged 454.84 points, or 1.6%, ending at 29,100.50, or 1.5% away from its February 12 closing high of 29,551.42. Even with this week's pullback, technology is up 27% this year, well ahead of the S&P 500's 10 other sectors. Amazon lost 4.6% and Facebook gave back 3.8%. Investors who got scared and yanked a collective $326 billion out of mutual funds and exchange-traded funds didn't get to enjoy the major gains seen by those who stayed in the market.

Even with Thursday's losses, Apple is still up 64.7% for the year, and Amazon is up 82.3%.

The share price for video conferencing app Zoom has gone up 460 per cent this year.

"There's really very little to justify [these stocks' upward move] other than euphoria", said Mark Hackett, chief of investment research at Nationwide.

The data adds pressure on the White House and Congress to restart stalled negotiations over the next coronavirus relief package to lift the economy out of the worst recession since the Great Depression. Back in March, the market plummeted as the coronavirus spread across the world, but stocks went on erase those losses soon after. Even with Thursday's losses, Apple is still up almost 65 percent for the year, Amazon shares are up over 80 percent, while Tesla stock has gained around 400 percent. The Federal Reserve is willing to let the United States economy run hot which is supportive overall of equities, while the "new normal" ensures the world remains reliant on Big Tech even as the pandemic rages on in major economies. The better-than-expected jobs report released in the morning contributed to the buying.

Traders are seeking to find an appropriate valuation for tech stocks and gauge the health of the USA economy as the coronavirus pandemic rages on after having killed more than 180,000 Americans. Tens of millions of Americans remain unemployed however, as seen by this week's unemployment benefits numbers.

Analysts said that could be a warning sign the job market is cooling after some USA states reimposed anti-virus controls and the expiration of supplemental unemployment benefits cut into consumer spending.

Recently, the VIX and S&P 500 index broke their historical pattern of moving in opposite directions by moving higher together, alarming some investors.

Shortly after 1500 GMT, the tech-rich Nasdaq Composite Index was down 3.7 per cent at 11,037.95, after earlier dropping 5 per cent. Nvidia, Qorvo and Advanced Micro Devices fell 8% or more.

The S&P 500 lost 125.78 points lower, down 3.5%, at 3,455.06.

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