Wall Street closed lower on Friday after a volatile week marked by high Treasury yields and the Federal Reserve’s revised hawkish outlook. Despite fluctuating throughout the session, all three major U.S. stock indexes ended in the red. The S&P 500 and Nasdaq experienced their largest weekly drops since March. The S&P 500 also fell below its 100-day moving average for the first time since March, indicating continued downward pressure. Investors have been hoping for lower interest rates, but the Fed’s messaging this week made it clear that they don’t believe the economy is ready for that yet. The stock market’s performance this week reflects the market’s adjustment to this reality.
Investors shifted their focus from the Fed’s guidance to upcoming economic data, causing benchmark U.S. Treasury yields to retreat from their 16-year highs. The Fed’s decision to keep its key interest rate unchanged but extend its restrictive monetary policy was still being digested. Fed Governor Michelle Bowman’s remarks on Friday supported the hawks within the FOMC, suggesting that interest rates should be raised further and kept at a restrictive level to bring inflation down. However, some experts warn that pushing rates higher could lead to a recession.
The Dow Jones Industrial Average fell by 0.31%, the S&P 500 lost 0.23%, and the Nasdaq Composite dropped 0.09%. Among the sectors, consumer discretionary suffered the steepest loss, while tech and energy were the only gainers. Ford Motor Co gained 1.9% after making progress in labor talks with the United Auto Workers union. Activision Blizzard also saw a 1.7% increase following Britain’s antitrust regulator’s statement that Microsoft’s acquisition of the company could be cleared. U.S.-listed Chinese shares rose between 2% and 4% on signs of an economic rebound, and Alibaba jumped 5.0% on reports of its logistics arm planning a Hong Kong IPO.
Declining issues outnumbered advancing ones on the NYSE and Nasdaq. The S&P 500 recorded one new 52-week high and 35 new lows, while the Nasdaq Composite had 33 new highs and 321 new lows. The volume on U.S. exchanges was slightly lower than the average for the past 20 trading days.
In conclusion, Wall Street experienced a turbulent week influenced by high Treasury yields and the Federal Reserve’s hawkish outlook. The stock market reacted to the Fed’s messaging, which indicated that lower interest rates are not yet warranted. Investors shifted their focus to upcoming economic data, causing Treasury yields to retreat. The major stock indexes ended the week in the red, with the S&P 500 and Nasdaq experiencing their largest drops since March. The market’s performance reflects the adjustment to the reality of the Fed’s stance.
