US stocks finished a chaotic week on a high note as a rally that started midday on Thursday and accelerated on Friday, but ultimately was not enough to offset losses incurred earlier in the week.
All three major indices fell for a fourth week in a row, albeit by less than last week: The Dow Jones Industrial Average shed 163.69 points (0.99 percent) to close at 16,380.41, while the broad-based S&P 500 lost 19.37 (1.02 percent) to end on 1,886.76 and the tech-rich NASDAQ Composite Index fell 17.80 (0.42 percent) to 4,258.44.
Wall Street equities veered near correction territory at midweek as worries about another eurozone crisis collided with fears about the spread of the Ebola virus to push markets deep into the red.
For Jack Ablin, chief investment officer at BMO Private Bank, the low point came with news that a nurse from Dallas with Ebola had boarded a commercial flight just before being diagnosed with the deadly virus.
“That’s when nerves were really frayed and investors were really worried,” he said, timing the news to a plunge in the Dow well bellow the 16,000-point mark.
Wednesday’s selloff was also spurred by a pair of surprisingly weak indicators for last month that suggested the economy may not be as strong as is widely thought.
The US Department of Commerce reported that retail sales dropped 0.3 percent last month to post the first decline in seven months, while the US Department of Labor said producer prices dipped 0.1 percent to record their first monthly fall since August last month.
Those figures were offset on Thursday as markets smiled at a 1 percent gain in industrial production last month and weekly jobless claims dropping to a 14-year low.
Also on Thursday, James Bullard, president of the St Louis branch of the US Federal Reserve, suggested the central bank could extend its bond-buying program instead of winding it down, as had been expected.
Bullard told Bloomberg Television he was concerned about falling inflation forecasts and said quantitative easing should continue.
Bullard’s remarks were “enormously important,” said Alan Skrainka, chief investment officer of Cornerstone Wealth Management. “His softening his tone is just the beginning of what we’re gonna hear from other Fed officials.”
Third-quarter earnings season yielded both good and bad news.
On the positive side, US industrial giant General Electric Co reported a solid 10.8 percent jump in earnings to US$3.5 billion behind higher sales in most industrial segments as chief executive Jeff Immelt effused on the nation’s economy.
“The US is probably the best we have seen it since the financial crisis,” Immelt said, while describing global conditions as “volatile.”
Delta Air Lines Inc sparked a rally in beaten airline shares as it offered a bullish fourth-quarter outlook and expressed confidence at the sector’s ability to manage Ebola.
“This isn’t the first communicable disease that we have faced as an airline or an industry and we are well-versed at managing these type of events,” Delta chief operating officer Gil West said.
Banking earnings were a mixed bag as JPMorgan Chase missed analyst expectations on unexpectedly large legal costs, but results at Citigroup Inc, Goldman Sachs and Morgan Stanley were strong.
Google Inc disappointed market watchers as third-quarter net income dropped 5 percent to US$2.8 billion due to weak online ad revenues. Apparel retailer Urban Outfitters Inc prompted a selloff in the sector following a profit warning due to weak sales. Earlier in the week, the much bigger Wal-Mart Stores Inc lowered its sales forecast for the year.
Earnings season continues to heat up next week with reports from heavyweights like Apple Inc and Amazon.com Inc, Boeing Co, General Motors and Procter & Gamble Co.
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