Stocks fell on Friday, adding to a sharp decline from the previous session, as tensions between the U.S. and China keep rising and tech shares struggled once again.
The Dow Jones Industrial Average traded 69 points lower, or 0.3%. The S&P 500 slid 0.4% and the Nasdaq Composite lagged with a 1.1% drop.
China ordered the closure of a U.S. consulate in Chengdu, retaliating after Washington shut the Chinese consulate in Houston earlier this week. China markets plunged in response, with the Shanghai Composite dropping 3.9% overnight.
Shares of Big Tech also dampened market sentiment, with Amazon, Apple and Microsoft each down more than 1%. Intel shares plunged more than 17% after the chipmaker offered disappointing guidance for the third quarter. Tesla dropped more than 8%. Those losses come after tech posted sharp losses in the previous session, dragging down the broader market.
Big Tech has been the market leader this year as investors grapple with the coronavirus pandemic and its impact on corporate profits. Amazon and Netflix were both up more than 47% year to date. Alphabet and Facebook are up over 13% over that time.
"Concerns of another technology bubble are rising," said Keith Lerner, chief market strategist at Truist/SunTrust Advisory, in a note. "There is also growing concentration risk, with the top five stocks now accounting for 22% of the S&P 500 Index."
To be sure, Lerner noted that "conditions today are largely not comparable to the mania seen during the technology bubble of the late 90s."
"Absolute valuations are elevated but are less than half of the levels reached back then. The rising influence of a small group of stocks is a risk for the overall market, though these same companies are also contributing an increasing amount of cash flow and profits," he said.
The Dow and Nasdaq entered Friday's session down 0.1% and 0.4%, respectively, for the week and the S&P 500 was up 0.3% in that time. At this rate, the Dow would snap a three-week winning streak and and the Nasdaq would log in its first back-to-back weekly declines since May.
That muted weekly performance comes amid worries about the economy. The Labor Department said Thursday that 1.4 million Americans filed for unemployment benefits for the week ending July 18, topping a Dow Jones estimate of 1.3 million claims.
This is "no doubt sobering and a clear reminder that the pandemic is far from finished exacting its toll on our economy," said Mike Loewengart, managing director of investment strategy at E-Trade. "While we're hanging on to hopes of a stimulus bill, Americans are feeling the pain of stalled reopenings and renewed shutdowns across the country."
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July 24, 2020 at 05:00AM
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Stocks fall amid U.S.-China tensions, tech shares drop again - CNBC
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