U.S. Stocks Close Roughly Flat Following Post-Election Rally

After coming under pressure in early trading on Friday, stocks recovered over the course of the session before closing little changed. The roughly flat close on the day came on the reels of the rally seen over the past few sessions.

The major averages finished the day on opposite sides of the unchanged line. While the Nasdaq inched up 4.30 points or less than a tenth of a percent to 11,895.23, the Dow dipped 66.78 points or 0.2 percent to 28,323.40 and the S&P 500 edged down 1.01 points or less than a tenth of a percent to 3,509.44.

Despite the mixed closed on the day, the major averages all moved sharply higher for the week. The Dow jumped by 6.9 percent, the Nasdaq soared by 9 percent and the S&P 500 spiked by 7.1 percent.

The early weakness on Wall Street was partly due to profit taking following the strong upward move seen over the past several sessions.

Lingering uncertainty about the outcome of the presidential election also weighed on the markets as several key states continue to count votes.

Democratic nominee Joe Biden now leads in Pennsylvania and Georgia, according to the latest numbers, suggesting the former Vice President is on track to exceed the 270 electoral college votes needed to win the White House.

However, President Donald Trump has claimed the increase in votes for Biden in a number of key states is proof of widespread voter fraud and pledged to take legal challenges to the results all the way to the U.S. Supreme Court.

The early selling pressure was partly offset by a closely watched report from the Labor Department showing stronger than expected job growth in the month of October

The report said non-farm payroll employment jumped by 638,000 jobs in October after surging up by a revised 672,000 jobs in September.

Economists had expected employment to increase by 600,000 jobs compared to the addition of 661,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate dropped to 6.9 percent in October from 7.9 percent in September. The unemployment rate was expected to slip to 7.7 percent.

“While the drop in unemployment was again mainly driven by temporarily laid-off workers returning to their old jobs, the number of permanent job losers also fell back slightly,” said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, “That could be a crucial sign that the longer-term damage from the pandemic will not prove as severe as many had feared.”

Sector News

Energy stocks showed a substantial move to the downside on the day amid a steep drop by the price of crude oil. Crude for December delivery tumbled $1.65 to $37.14 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index both plunged by 2.7 percent, while the NYSE Arca Oil Index fell by 1.9 percent.

Significant weakness was also visible among housing stocks, as reflected by the 2.4 percent slump by the Philadelphia Housing Sector Index.

Biotechnology and banking stocks also saw considerable weakness on the day, while semiconductor, networking and steel stocks showed strong moves to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index advanced by 0.9 percent, while Australia’s S&P/ASX 200 Index climbed by 0.8 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index fell by 0.5 percent and the German DAX Index slid by 0.7 percent.

In the bond market, treasuries came under pressure after ending the previous session little changed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.4 basis points to 0.820 percent.

Looking Ahead

Next week’s trading may continue to be impacted by reaction to the results of this week’s elections, while reports on consumer and producer price inflation may also attract some attention.

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