Nasdaq closes lower to end its worst week since March as tech continues to struggle

The Nasdaq Composite fell in another volatile session on Friday as the continuing tech sell-off drove the benchmark to its worst week in months. 

The Nasdaq closed 0.6% lower at 10,853.55. At its session high, the composite rose as much as 1%; it was down more than 1.7% at one point as well. Apple dropped 1.3% and Amazon fell by 1.9%. Facebook, Alphabet and Microsoft were all down.

The S&P 500 eked out a small gain after gyrating between solid gains and steep losses. The broader-market index closed about 0.1% higher at 3,340.97. Meanwhile, the Dow Jones Industrial Average ended the day up 131.06 points, or 0.5%, at 27,665.64. The 30-stock average was up 294.24 points, or 1.1%, at its session high and fell as much as 86.46 points. 

"Markets continue to struggle finding an equilibrium," said Mark Hackett, chief of investment research at Nationwide. "This market is more akin to the emotional swings of March and April than in recent months. We are likely to continue in a period of directionless volatility as bulls and bears wrestle between the strong Fed liquidity and improving economic backdrop and the continued uncertainty and elevated valuations."

Tech selling briefly picked up after Bloomberg News reported, citing sources, that SoftBank was considering changes to its options trading strategy. Last week, SoftBank was identified as the "Nasdaq whale" that bought billions in stock options in a bet for higher prices in Big Tech. 

All three of the major averages posted steep losses for the week. The Nasdaq fell 4.1% week to date for its biggest weekly decline since March. The S&P 500 had its worst one-week performance since June, falling 2.5%. The Dow fell 1.7% this week. 

"The next couple of sessions will be crucial in judging the possible extent of the pullback, and bulls will be looking for signs of positive divergences as the major indices approach their 50-day moving averages," said Ken Berman, strategist at Gorilla Trades.

Big Tech was also down sharply week to date. Facebook and Amazon each lost more than 5% this week. Apple and Netflix slid 7.4% and 6.6%, respectively. Alphabet and Microsoft were both down more than 4% week to date. Tesla, meanwhile, plunged 10.9% this week. At the S&P 500 sector level, tech fell 4.4% week to date for its biggest one-week loss since March.

Wall Street was coming off a session in which the major averages closed sharply lower after a steep downturn in tech names. Those losses came after the benchmarks gave up solid gains. 

Douglas Busch, founder of ChartSmarter.com, said a "hallmark" of a healthy market is closing near its high after a weak start. "The opposite of that action could be the definition of how the benchmarks fared Thursday," he said.

"Decent early gains quickly faded, and as many stated last week's lows were critical to hold," Busch said in a note to clients. "Perhaps, for the first time in a while, we can say advantage bears."

Consumer prices jump in August

The Labor Department said Friday its U.S. consumer price index rose by 0.4% in August. Eonomists polled by Reuters expected an increase of 0.3%.

That larger-than-expected advance was driven the biggest cost increase for used cars and trucks in more than 51 years. 

"The resurgence in economic demand following the pandemic lock down has turned the direction of consumer prices on its head with pent-up purchases from the consumer dramatically changing the deflation trend to an inflation trend," said Chris Rupkey, chief financial economist at MUFG. 

— CNBC's Yun Li contributed reporting.

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