S&P 500 Posts 1.2% Weekly Decline, Marking Second Straight Week in Red Amid Omicron Worries, Hiring Slowdown
The Standard & Poor's 500 index fell 1.2% this week, with communication services leading a broad drop, amid worries about the COVID-19 omicron variant and data showing a slowdown in US hiring last month.
The market benchmark ended the week at 4,538.43, down from last Friday's closing level of 4,594.62. This comes after the index had already fallen 2.2% last week; it is now down 3.4% from its closing level two weeks ago. However, the S&P 500's performance is still strong on a year-to-date basis, up nearly 21% for 2021 with just four weeks remaining in the year.
The week's declines heading into Friday's session came as new cases of the omicron variant were reported in a number of countries including the US. Some countries resumed restrictions, prompting more worries about the potential economic impact of the variant, which has many mutations and was designated last week by the World Health Organization as a variant of concern. It isn't yet known how well existing vaccines are able to neutralize the variant.
Friday, stocks fell further — with the S&P 500 logging a 0.8% drop for the day — as the US Labor Department reported November nonfarm payrolls rose by 210,000, well below the 550,000 jobs increase that was expected in a survey compiled by Bloomberg. October payrolls had a small upward revision to a 546,000 increase.
Still, the data also showed the unemployment rate fell to 4.2% in November from 4.6% in October, compared with the 4.5% rate expected, while the labor force participation rate rose to 61.8% from 61.6% in the previous two months and the size of the labor force increased.
All but two sectors were in the red for the week. Communication services had the largest drop, down 2.8%, followed by a 2.4% slide in consumer discretionary and a 2% decline in financials. The two sectors that managed to gain were utilities, up 1%, and real estate, up 0.1%.
The decliners in communication services included ViacomCBS (), which said it would sell its CBS Studio Center in Los Angeles for about $1.85 billion as part of an initiative to redeploy resources toward higher-growth businesses such as streaming. The media conglomerate said the property is being sold to a partnership formed by Hackman Capital Partners and Square Mile Capital Management. Shares of ViacomCBS fell 4.7% on the week.
Also in communication services, shares of Twitter () fell 11% this week. The microblogging company disclosed Monday that Jack Dorsey, its co-founder and chief executive, was stepping down from the helm immediately. Chief Technology Officer Parag Agrawal was named to succeed Dorsey as CEO.
The consumer discretionary sector was weighed down by travel-related stocks due to fresh travel restrictions being enacted by many countries amid the omicron variant. These included cruise operators Norwegian Cruise Line Holdings (), down 8.8%, and Carnival (), down 4.2%, as well as resort operators Las Vegas Sands (), down 9.5%, and Wynn Resorts (), down 6.5%.
On the upside, the gainers lifting the utilities sector included NextEra Energy (), whose shares rose 2.3% as the company said it will offload a 50% stake in a portfolio of renewable-energy assets as part of the clean energy company's efforts to redeploy capital into new growth opportunities.
Next week, inflation readings will be in focus as data are expected Friday on the November consumer price index and core inflation. The first reading of December consumer sentiment will also be released next Friday. Other data leading up to that will include the October trade deficit and consumer credit on Tuesday and weekly jobless claims as well as Q3 real household wealth on Thursday.