A further slump in oil prices, a growing sense the Fed will soon raise interest rates, and a host of disappointing earnings reports made stocks fade like a slow summer sunset last week. The Dow notched its longest losing streak in four years, falling for the seventh straight day on Friday. Investors who weren’t on their sailboats didn’t seem particularly alarmed. The indexes are still much closer to their record highs than they are to bear market territory. And it’s August after all.
“On a Friday in August, it’s hard to draw conclusions about markets,” says Scott Clemons, chief investment strategist at Brown Brothers Harriman. “I don’t tend to read a whole lot into August trading patterns for the obvious reasons of thin markets and light participation.”
Trading on Friday was influenced by the government’s July jobs report, which came in roughly in line with expectations and solidified consensus expectations that the Fed will increase rates in September. The economy added 215,000 jobs and the unemployment rate stayed at 5.3%.
The Dow Jones Industrial Average fell 316 points, or 1.8%, on the week, to 17,373.38. The Standard & Poor’s 500 index dropped 26 points to 2077.57. The S&P has now fallen for five of the past seven weeks, and sits 2.5% below the highs it hit in May. The Nasdaq Composite fell 85 points, or 1.7%, to 5043.54.
Disney (ticker: DIS) led the Dow lower, falling 8.9% on the week after CEO Robert Iger said its sports unit, ESPN, had lost subscribers. The news hurt shares of several media companies, including Time Warner (TWX). Energy companies also slid along with the price of West Texas oil, which was down 6.9% to $43.87. Chevron (CVX) hit a new 52-week low, dropping 5.3% on the week.
(Source: Barrons Online)