U.S. stocks ended mixed on Friday, with the tech-savvy Nasdaq Composite and the S&P 500 lower, as investors aggressively raised interest rates and continued to digest the Federal Reserve’s plans to lower its balance sheet. Key inflation data and corporate earnings reports will be released next week.
How did stock codes work?
Dow Jones Industrial Average DJIA
137.55 points or 0.4% higher at 34,721.12.
S&P 500 SPX
It fell 11.93 points, or 0.3%, to 4,488.28.
Nasdaq Joint COMP
186.30 points or 1.3% lower at 13,711.
During the week, the Dow fell 0.3%, the S&P 500 1.3% and the Nasdaq 3.9%. According to Dow Jones market data, the S&P 500 and Nasdaq each hit a three-week winning streak.
What drove the markets?
US key stock definitions fell sharply, ending lower after the S&P 500 index struggled for direction in the previous session, while investors continued to digest expectations that the Federal Reserve would fight higher inflation.
Bob Doll, chief investment officer at Crossmark Global Investments, said in a phone interview on Friday that the Federal Reserve was not too worried about inflation becoming a problem six to nine months ago. “Now they are circling themselves to see who could be more hawks,” he told central bank officials.
Earlier this week, Central Bank Governor Lyle Brainard delivered a scathing speech that included the central bank’s austerity measures, rising interest rates and the rapid pace of balance cuts that could begin early in May. Wednesday’s report from the last Federal Open Market Committee meeting set the stage for a $ 95 billion a month cut in the central bank’s balance sheet, while reaffirming the possibility of multiple, half – point increases in interest rates at future policy meetings.
“Just because the Fed starts raising rates doesn’t mean the economy is going into the tank right away,” Doll said. He said that although economic growth has slowed from 2021, he expects this year to be “OK” and inflation, which has been running at a 40-year high, is likely to peak by mid-2022.
“Hot inflation, rising rates and the Russian-Ukrainian war weigh in on investor sentiment,” Doll said.
Technology and other growth stocks, which are highly sensitive to interest rates, were under renewed pressure on Friday as treasury revenues continued to rise, pulling the Nasdaq.
“The Nasdaq has a longer-term stake than the S&P 500,” Doll said, adding that companies with a more technologically advanced Nasdaq mix would have more potential returns in the future than they do now. This makes them more vulnerable to rising interest rates, pointing to the yield of the 10-year Treasury note above 30 basis points this week.
Yields on the 10-year Treasury Note BX: TMUBMUSD10Y were up 5.9 basis points at 2.713% on Friday, according to Dow Jones Market data, the highest level since March 5, 2019 at 3 p.m. The 10-year yield is up 33.9 basis points this week and is up four points from the last five weeks.
“As rates rise, the Nasdaq will be a little harder,” William Huston, chief investment officer at Bay Street Capital Holdings in Palo Alto, California, said in a phone interview Friday. Huston said when SPDR S&P Bank added ETF KBE, it made some portfolio changes earlier this year in anticipation of rising interest rates, reducing the exposure of companies monitored by the Nasdaq-100 index.
And Brochures S&P500 Dividend Aristocrats EDF Noble.
Shares of Invesco QQQ Foundation QQQ,
It tracks the Nasdaq-100 index, which fell 1.4% on Friday, raising its annual losses to 12%, according to FactSet data. Also, FactSet data shows that information technology performed the worst in 11 sectors of the S&P 500 this week, down about 4%.
Meanwhile, analysts said stocks strengthened on expectations for a strong first-quarter earnings reporting season, which begins next week with enthusiasm as big banks announce results.
Peter Cardillo, chief market economist at Spartan Capital Securities, said: “While we see Q1 earnings living in line with market expectations, we expect investors to bet on good returns as the market recovers from uncertainties.
Although stock indices are unlikely to return to February lows, he wrote, “we see a stagnant trading limit as the central bank is very active in combating inflation.” “In other words, carefully selected individual stocks beat the overall average.”
With the March Consumer Price Index report coming out next week, analysts say the debate over central bank policy will continue to dominate market sentiment.
Which companies focused?
Chief Elon Musk promised the 2023 deliveries of the Cybertruck pickup and Tesla Semi on Thursday night. During an event at the company’s Gigafactory in Texas, reports said. The shares are down 3%.
Shares WD-40 Co.
The maintenance and cleaning products company rose 7.1% after generating big revenue and predicts that rising inflation will have only a small effect on annual profits.
Shares rose 1.5% after centers for medical and medical services overseeing the Medicare plan announced on Thursday that they had finalized their policies regarding the inclusion of biotex’s controversial Alzheimer ‘drug Aduhelm and others in the future.
How were the other assets?
ICE US Dollar Index DXY,
The currency measure against the basket of the six main competitors rose 0.1% on Friday to its weekly high of 1.2% earlier this week, reaching its highest level since May 2020.
Was down 2.3% to $ 42,590.
Oil futures, West Texas Intermediate crude for May delivery rose 2.3% to $ 98.26 a barrel on Friday. But oil prices, measured by the US benchmark, fell 1.2% for the second week in a row.
Gold GCM22 for June delivery
The ounce ended 0.4% higher at $ 1,945.60 an ounce on Friday.
In European stocks, Stoxx Europe 600 XX: SXXP
Friday closed 1.3% higher and rose 0.6% this week. London FTSE 100 UK: UKX
The 1.7% weekly advance received 1.6% on Friday.
Asian stocks ended with a moderate rise on Friday, but recorded a weekly decline. Shanghai Joint CN: SHCOMP
Closed up 0.5% and saw a weekly fall of 0.9%, while the Hong Kong index HK: HSI
Hong Kong rose 0.3% on Friday and fell 0.8% during the week. Japan’s Nikkei 225 JP: NIK
It closed 0.4% higher on Friday but was down 2.5% during the week.
–Steve Goldstein contributed to this article.