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Continued Weakness Among Tech Stocks Contributes To Lower Close On Wall Street

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Stocks initially showed a lack of direction but came under pressure over the course of the trading session on Friday. The major averages slid firmly into negative territory, extending the pullback seen over the two previous sessions.

The major averages climbed well off their worst levels late in the session but remained firmly negative. The Dow slid 244.56 points or 0.9 percent to 27,657.42, the Nasdaq tumbled 116.99 points or 1.1 percent to 10,793.28 and the S&P 500 slumped 37.54 points or 1.1 percent to 3,319.47.

For the week, the Dow edged down by less than a tenth of a percent, while the broader Nasdaq and S&P 500 both fell by 0.6 percent.

The weakness that emerged on Wall Street was partly due to a continued slump by technology stocks, with tech giant Apple (AAPL) showing a significant drop.

Shares of Apple, which have been a key driver of the markets in most recent sessions, tumbled by 3.2 percent to their lowest closing level in well over a month.

Big-name tech companies like Google parent Alphabet (GOOGL), Amazon (AMZN), and Microsoft (MSFT) also posted notable losses.

Traders also continued to express renewed concerns about the economic outlook following the Federal Reserve's monetary policy announcement on Wednesday.

While the Fed indicated it plans to leave interest rates at near-zero levels for years to come, traders seem skeptical that will be enough to support the economy.

With the elections less than two months away, lawmakers currently seem unlikely to pass another stimulus bill to help the economy recover from the coronavirus pandemic.

Recent economic data suggests the rebound from the lockdown-induced economic collapse may be plateauing, raising concerns about the possibility of a double-dip.

A report released by the Conference Board showed a continued increase by its reading on leading U.S. economic indicators in the month of August, although the pace of growth slowed compared to recent months.

The Conference Board said its leading economic index jumped by 1.2 percent in August after surging up by 2.0 percent in July and spiking by 3.1 percent in June. Economists had expected the index to increase by 1.3 percent.

Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board, said the slowdown in the pace of improvement "suggests that this summer's economic rebound may be losing steam heading into the final stretch of 2020."

Meanwhile, a separate report from the University of Michigan showed a much bigger than expected improvement in consumer sentiment in the month of September.

Sector News

Airline stocks moved sharply lower over the course of the session, dragging the NYSE Arca Airline Index down by 3.2 percent. The index continued to give back ground after reaching a three-month closing high on Wednesday.

Substantial weakness was also visible among commercial real estate stocks, as reflected by the 2.1 percent slump by the Dow Jones U.S. Real Estate Index.

Interest rate-sensitive commercial real estate stocks extended the steep drop seen in the previous session despite indications the Fed plans to keep rates low for a long time.

Oil service stocks also came under pressure as the day progressed, with the Philadelphia Oil Service Index falling by 1.4 percent despite a modest increase by the price of crude oil.

Chemical, gold and utilities stocks also saw considerable weakness on the day, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index edged up by 0.2 percent, while China's Shanghai Composite Index spiked by 2.1 percent.

Meanwhile, the major European markets moved to the downside on the day. While the French CAC 40 Index slumped by 1.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index both slid by 0.7 percent.

In the bond market, treasuries turned in another lackluster performance before closing slightly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1 basis point to 0.694 percent.

Looking Ahead

Congressional testimony by Fed Chair Jerome Powell may attract attention next week along with reports on new and existing home sales and durable goods orders.

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