US stocks falter, heading for 4th straight weekly loss
Stocks faltered in morning trading on Wall Street on Friday and are still on course for another week of losses in what has been a miserable open to the year.
The S&P 500 fell 0.1% at 10:23 a.m. EST and is on course to lose more than 10% of its value from the record high it set on Jan. puts it on track to close in what market watchers call a “correction.”
The Dow Jones Industrial Average fell 135 points, or 0.4%, to 34,036 and the Nasdaq was relatively unchanged.
Bond yields were stable. The 10-year Treasury yield has remained at 1.81% since Thursday evening.
The S&P 500 and Dow are on course for their fourth consecutive weekly loss and the Nasdaq is heading for its fifth consecutive weekly loss. Large weekly losses like this haven’t hit the market since September 2020.
Industrial stocks and banks fell and weighed on the market, but big tech companies and communications stocks made gains and offset losses elsewhere.
Stocks soared this week as investors tried to gauge how the Federal Reserve would move forward with the easing of its historic support for markets and the economy. Major indices have spent much of the week swinging sharply from big gains to deep losses and vice versa.
The central bank plans to raise interest rates to fight rising inflation and investors are worried about the timing and pace of the Fed’s policy change. The Fed’s latest statement on Wednesday, along with comments from Chairman Jerome Powell, revealed that it plans to raise rates “soon” and will phase out monthly bond purchases, which were intended to lower long-term rates. , in March.
Investors expect the first rate hikes to come in March.
Powell acknowledged that high inflation that is squeezing businesses and consumers is not loosening its grip and that could force the Fed to act more aggressively to raise interest rates.
The latest set of corporate results showed companies are still feeling the pinch from supply chain issues, raw material costs and other inflationary pressures.
Oreo cookie maker Mondelez fell 2.9% after issuing its latest inflation warning hurting operations in North America. KLA, which makes equipment for chipmakers, fell 3.1% and computer hard drive maker Western Digital fell 5.4% after giving equally disappointing updates on the pressure of the ‘inflation.
Other government reports also show that consumers are facing higher prices and may be discouraging spending. A measure of prices that is closely tracked by the Fed rose 5.8% last year, the biggest increase since 1982. The Commerce Department report also said consumer spending fell 0.6 % in December, with purchases of cars, electronics and clothing falling. .
Inflation worries and worries about the impact of rising interest rates converged this week with worries about a potential conflict between Ukraine and Russia that could drive up energy prices. Conflict could also distract nations from focusing on the lingering virus pandemic, which continues to threaten economic growth, with each wave increasing COVID-19 cases.