On Friday, stocks declined as investors concluded a volatile week in anticipation of the Federal Reserve’s policy meeting. The Dow Jones Industrial Average fell by 288.87 points, or 0.83%, closing at 34,618.24. The index erased the previous day’s 332-point gain at its lowest point. The S&P 500 declined by 1.22% to 4,450.32, and the Nasdaq Composite dropped by 1.56% to 13,708.33.
For the week, the Dow managed to finish slightly positive, with a gain of 0.12%. However, both the S&P 500 and Nasdaq experienced their second consecutive week of losses, declining by 0.16% and 0.39%, respectively.
The information technology sector was the poorest performer in the S&P 500, declining by nearly 2%. Adobe’s stock dropped over 4% despite the company reporting better-than-expected quarterly results. Arm Holdings saw a 4.2% decrease in its shares one day after its successful public debut.
Auto companies General Motors and Stellantis N.V. saw gains on Friday, while Ford’s stock edged lower due to a strike by thousands of United Auto Workers members after failing to reach an agreement with the automakers on Thursday night.
Lennar, a home construction firm, experienced a 2.5% decrease in its shares despite posting third-quarter results that exceeded expectations both in revenue and earnings on Thursday.
In economic news, the University of Michigan’s consumer sentiment survey indicated a decrease in one-year inflation expectations to 3.1% in September, tying it for the lowest level since January 2021. The five-year outlook also fell to 2.7%, matching its lowest level since December 2020.
As Wall Street anticipates the Federal Reserve’s policy decision scheduled for September 20, investors are analyzing a mixed set of economic data. The central bank is expected to maintain current interest rates, but market participants are eager for insights into the Fed’s perspective on inflation moving forward.
In 2022 and 2023, the central bank took assertive steps to curb inflation by implementing substantial interest rate increases. However, during its most recent meeting, the central bank opted to keep interest rates steady. Inflation, on the whole, has been gradually moving closer to the central bank’s target of 2%.
Regarding recent inflation data, August’s producer price index showed that core PPI remained relatively stable, although the headline number exceeded expectations. In contrast, August’s consumer price index from Wednesday indicated that core CPI was slightly higher than anticipated on a monthly basis.
In August, consumer-level inflation slightly exceeded expectations, primarily driven by elevated gasoline prices. This increase in gas prices can be attributed to the upward trajectory of oil prices during the summer, which resulted from Saudi Arabia’s decision to continue production cuts. This decision raised concerns about the possibility of gasoline prices surging and contributing to inflation.
On Friday, all sectors within the S&P 500 closed in negative territory, with the technology sector having the most significant impact on the index’s decline. Microsoft saw a 2.5% drop, and chip manufacturer Nvidia experienced a 3.7% slide. Retail companies also exerted downward pressure on the index, with Amazon falling by 3%, Home Depot decreasing by 2.5%, and Lowe’s Co. slumping by 4.7%.
In total, the S&P 500 lost 54.78 points, closing at 4,450.32. Year-to-date, it has gained just under 16%.
The Dow Jones Industrial Average fell by 288.87 points, ending the day at 34,618.24. The Nasdaq, which has a substantial allocation to technology stocks, dropped by 217.72 points to reach 13,708.33.
Bond yields made gains, with the yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, rising to 4.33% from 4.29% late Thursday. Meanwhile, the yield on the 2-year Treasury remained steady at 5.02%.
(Source: Jeff Cox | CNBC | Damian J. Troise | Alex Veiga | Associated Press)
