The Nasdaq Composite Index closed at a record high on Friday but blue-chip US stocks and oil sank amid renewed concerns about Covid-19 which also boosted safe havens like the US dollar.
The surge by the tech-heavy Nasdaq came as investors fretted about renewed lockdowns after Austria announced new restrictions to deal with rising cases and fears Germany that could follow suit.
Banks and travel companies bore the brunt of the losses as investors fretted about reduced economic activity if case numbers rise and jumped to safer havens in tech stocks.
“It’s a normal time to take risk off. And in this case, there’s just so much liquidity that the market doesn’t go down; people take risk off by going into safe havens,” said Jay Hatfield, Chief Executive of Infrastructure Capital Management in New York. “Right now, Covid-19 is kind of a headline of the day. Every trade in the market right now is being driven by Covid.”
The Dow Jones Industrial Average ended the week down 0.75 per cent, closing for its fourth week down in five. The S&P 500 lost 0.14 per cent, while the Nasdaq Composite added 0.4 per cent and closed above 16,000 for the first time.
The MSCI world equity index, which tracks shares in 45 nations, fell 0.28 per cent.
Renewed Covid worries also helped send oil prices down over 3 per cent, after the sector had already been grappling with concerns over reduced demand and potential release of crude reserves to ease gas prices.
Brent crude was down 3.47 per cent to $78.42 a barrel, while US crude fell 3.67 per cent to $76.11 per barrel. Both benchmarks were down for four straight weeks for the first time since March 2020.
The return of Covid-19 fears led to a boost across a range of safe havens.
Long-dated US Treasury yields dipped Friday on heightened demand. Benchmark 10-year notes last yielded 1.545 per cent after dropping as low as 1.515 per cent the lowest since November 10.
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The dollar surged after Federal Reserve Governor Christopher Waller called for quicker tapering of economic support to tighten up the central bank’s monetary policy. Federal Reserve Vice Chair Richard Clarida said separately it may be appropriate to consider a quicker wind-down when the Fed next meets to set policy in mid-December.
The dollar index, which tracks the green-back versus a basket of six currencies, rose 0.51 per cent to 96.029. The dollar is up roughly 1 per cent on the week, while the euro hit a 16-month low.
Spot gold declines
The dollar’s gains came at the expense of gold. Spot gold prices fell 0.62 per cent to $1,846.91 an ounce.
“Gold prices are declining after some hawkish Fed speak about accelerated tapering boosted the dollar,” said Edward Moya, senior market analyst at brokerage OANDA.