Market Snapshot: Nasdaq rises, Dow falls as U.S. stocks trade mixed amid COVID-19 jitters

What’s driving the market?

Large-capitalization technology stocks were helping deliver a fillip to a market that has otherwise been stricken by renewed angst COVID-19 angst.

“There’s a little bit of malaise around COVID,” said Tony Roth, chief investment officer at Wilmington Trust, in a phone interview Friday. “Europe is having a lot of problems right now,” raising concerns that a similar spike in COVID infections could follow in the U.S.

That has prompted investor interest in the “stay-at-home trade,” including technology stocks, and areas of the market that tend to fare better in a lower interest-rate environment such as growth equities RLG, +0.45%, according to Roth. By contrast, travel-oriented stocks “are not doing so great today in the market,” he said.

Some investors suggest that bearish news on rising cases of the infectious disease are being used as an opportunity to lighten exposures, headed in a seasonally thinly traded period of the U.S. Thanksgiving week holiday on Thursday.

“Big Tech lifting Nasdaq up 0.5% to a record high and helping the S&P 500 fend off any meaningful decline,” wrote Neil Wilson, chief market analyst at Markets.com, in a Friday note.

An announcement of a 20-day nationwide COVID lockdown by the Austrian government spooked stock markets and sparked buying in government safe-haven bonds on Friday.

Austria’s lockdown will include both those vaccinated and unvaccinated, with movement for the latter having been restricted over the past week. The news from Vienna comes as Germany’s health minister on Friday said that lockdowns couldn’t be ruled out in his country, with record cases this week in Germany and Austria.

“I think we’re seeing a knee-jerk reaction to Austria’s lockdown announcement that’s more a reflection of fear than reality,” said Craig Erlam, senior market analyst at OANDA, in emailed comments. “Other countries like the U.S., U.K. and others will be very reluctant to impose such measures again and will likely adopt a lighter touch, if necessary, and unless unavoidable.”

In the U.S. cases have been rising in the Upper Midwest, with a busy travel season about to begin ahead of next Thursday’s Thanksgiving holiday. Also, the daily case count topped 100,000 for a second straight day on Thursday, with the seven-day average rising to a six-week high of 94,669, according to a New York Times Tracker.

The reports of rising infections pushed down oil prices on fears of a fall in demand resulting from COVID lockdowns. West Texas Intermediate crude CLZ21, -3.75% was down 3.4% at $ 76.35 a barrel and Brent BRNF22, -2.99% crude fell about 3% to $ 78.82 a barrel, based on Friday afternoon trading.

U.S. markets will close for the Thanksgiving holiday next Thursday, with a shortened session of trading next Friday.

A number of analysts have expressed bullishness about equities, despite a wall of worry, which includes concerns about inflation and the pace of interest rates hikes by the Federal Research.

“The real risk is inflation,” said Roth, “not a lack of economic activity because of COVID.” Roth said he remains “pretty optimistic” about growth in the U.S. partly due to the availability of booster shots for COVID-19 vaccines.

On Friday, Fed Gov. Christopher Waller said the central bank may need to pivot to a faster tapering of its bond purchase program based, in part, on high inflation readings, in a speech to the Center for Financial Stability. Waller described the high inflation seen this year as a “big snowfall that will stay on the ground for a while” rather than a one-inch dusting.

However, investors have appeared eager to buy through the concerns about pricing pressures and eventual policy tightening.

“Buy any dip in the next two weeks and be positioned for a bullish couple of months to follow,” the founder of asset-management firm Navellier & Associates, Louis Navellier, advised clients in a note Thursday.

“Expectations were that interest rates would rise and punish growth stocks more than value stocks from a compression of P/E multiples,” he said. “Most likely now is a consolidation phase, with a bias to companies with strong cash flows, and then a sprint by growth names into year-end with a follow-through into traditionally risk-on January.”

Read: Should stock-market investors who ‘missed the rally’ buy now? Here’s what UBS says

Investors will watch for comments from the Federal Reserve’s No. 2 Richard Clarida, who also is due to speak later in the session.

Markets are also waiting for President Joe Biden to nominate who will head the central bank after Jerome Powell’s term finishes in February. Markets expect Biden will either renominate Powell or Fed Gov. Lael Brainard.

The uncertainty is “very much hanging over markets right now,” said Roth, who worries that Brainard might be “so dovish” as to increase the potential for a policy mistake by waiting too long to hike rates against the backdrop of elevated inflation.

Read: Why banks prefer Brainard over Powell to lead the Fed

Elsewhere, House Democrats passed Biden’s $ 1.85 trillion social spending agenda, after plans for a Thursday evening vote were delayed by a nearly four-hour speech by Minority Leader Kevin McCarthy. The bill must now be approved by the Senate.

Which companies are in focus?

• Intuit Inc. INTU, +8.79% shares jumped almost 10% and headed toward record highs, after the software company raised its annual guidance while integrating recent acquisitions.
• Evercore ISI’s C.J. Muse elevated Micron MU, +8.39% and Lam Research Corp. LRCX, +1.96%  to his firm’s “top picks” list Friday, arguing that both could benefit from the “green shoots” he’s seeing in the memory industry. Shares of Micron jumped 8%, while those for Lam were up 2.3%.
• Shares of Walmart Inc. WMT fell 0.7%, after MKM Partners analyst Bill Kirk said the discount retail giant is “doing the most, but getting the least credit.”
• Shares of Foot Locker Inc. FL plunged about 12%, even after the athletic shoe and apparel retailer reported Friday fiscal third-quarter adjusted profit and sales that rose above expectations, while cost of sales fell, and said it was “ready” for the holidays despite the supply chain issues. 
• KinderCare Learnings Companies Inc. KLCsaid it will postpone its initial public offering, citing regulatory delays. 
• Shares of Workday Inc. WDAY were off 4.2% after the software company reported fiscal third-quarter results that surpassed Street estimates, named Barbara Larson as new chief financial officer, and its intention to acquire VNDLY, a cloud-based vendor-management software company. 
• Nike Inc. NKE said late Thursday that its board of directors has approved a 11% dividend increase to 30.5 cents a share. Its shares are up 2.4%.
• Shares of Sweetgreen Inc., which recently made its debut as a publicly traded company, was trading 3% higher. The California-based operator of health-driven restaurants saw its stock surge on Thursday.

How are other assets faring?

• The yield on the 10-year Treasury note TMUBMUSD10Y fell about 5 basis points to around 1.54%. Yields and debt prices move in opposite directions.
• The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.4%, trading around its highest level since July 2020.
• Gold futures GC00 edged 0.6% lower to around $ 1,850.40 an ounce, with the precious metal hemmed in partially by the dollar’s rise.
• The Stoxx Europe 600 SXXP retreated 0.3% and posted a 0.1% weekly slide, while London’s FTSE 100 UKX finished the session down around 0.5% for a weekly decline of 1.7%.
• In Asia, the Shanghai Composite SHCOMP rose 1.1% to gain 0.6% on the week, while the Hang Seng Index HSI declined 1.1% in Hong Kong, notching a 1.1% decline for the week, and China’s CSI 300 000300, +1.08% rose 1.1% to help it finish about flat for the week, and Japan’s Nikkei 225 NIK rose 0.5% on the session Friday for a 0.5% weekly gain.