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Wall Street closed mixed on Friday after a choppy session. Market participants were busy assessing sticky inflation and prolonged higher interest rate regime. The Dow ended in positive territory while both the S&P 500 and the Nasdaq Composite finished in negative zone. For the last week, the Dow and the S&P 500 ended in red while the Nasdaq Composite finished in green. U.S. stock markets were closed on Monday to celebrate Presidents’ Day.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.4% or 129.84 points to close at 33,826.69. Notably, 17 components of the 30-stock index ended in positive territory while 13 in negative zone. The blue-chip index was down nearly 160 points at intraday low. The tech-heavy Nasdaq Composite finished at 11,787.27, sliding 0.6% due to weak performance of large-cap technology stocks.
The S&P 500 fell 0.3% to end at 4,079.09. Six out of 11 broad sectors of the benchmark index closed in positive territory while five in red. The Consumer Staples Select Sector SPDR (XLP) and the Utilities Select Sector SPDR (XLU) were up 1.3% and 1.1%, respectively. On the other hand, the Energy Select Sector SPDR (XLE) and the Technology Select Sector SPDR (XLK) were down 3.6% and 1.3%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 0.7% to 20.02. A total of 10.6 billion shares were traded on Friday, lower than the last 20-session average of 11.7 billion. The S&P 500 posted eight new highs and one new low while the Nasdaq recorded 75 new highs and 68 new lows.
Hot Inflation Data Raises Fear
Markets have been volatile over the past few sessions, as economic data released earlier this week suggested that the economy needs to traverse a tough path to bring soaring inflation under control. On Feb 16, another round of inflation data showed that the crisis is far from over.
January’s producer price index (PPI) report showed that wholesale inflation increased 0.7% month over month, which was higher than economists’ expectations of a rise of 0.4%. This is also the biggest jump since last summer, indicating that inflation is still quite high and is unlikely to ease soon. Core PPI, which excludes the volatile food and energy costs, increased 0.5%, the steepest rise in the past 10 months.
Thursday’s reports came just two days after the consumer price index (CPI) report showed that the cost of living rose 0.5% month over month in January. This was followed by solid retail sales data, indicating that spending is still high despite soaring prices.
Higher Rate Regime Likely to Extend
The fears of higher interest rate hikes were fueled further following comments from St. Louis Federal Reserve President James Bullard. He said that he had proposed a 50-basis point rate hike in the Fed’s last meeting and such a hike could be expected in the March meeting. Bullard’s sentiments were echoed by Cleveland Fed President Loretta Mester, saying that she also supports a steeper rate hike in the next meeting, which further weighed on stocks.
On Feb 17, Federal Reserve Governor Michelle Bowman said “I think there’s a long way to go before we reach our 2% inflation objective and I think we’ll have to continue to raise the federal funds rate until we see a lot more progress on that.”
Fearing prolonging higher interest rate regime, the ICE dollar Index rose 0.25% last week. The yield on the benchmark 10-Year U.S. Treasury Note rose 8.4 basis points last week to close at 3.827%. Consequently, share prices of rate-sensitive technology stocks, such as Microsoft Corp.(MSFT - Free Report) and Alphabet Inc. (GOOGL - Free Report) dropped 1.6% and 1.2%, respectively. Both stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Weekly Roundup
Last week was a mixed one for Wall Street. The Dow fell 0.1%, marking three consecutive weeks of decline. This happened for the first time since September 2022. The S&P 500 shed 0.3% posting losses for two successive weeks for the first time in 2023. However, the Nasdaq Composite rose 0.6% last week.
Stubbornly high inflation, strong economic data like nonfarm payrolls and retail sales and a possible extension of the higher interest rate regime unnerved sentiment.
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Stock Market News for Feb 21, 2023
Wall Street closed mixed on Friday after a choppy session. Market participants were busy assessing sticky inflation and prolonged higher interest rate regime. The Dow ended in positive territory while both the S&P 500 and the Nasdaq Composite finished in negative zone. For the last week, the Dow and the S&P 500 ended in red while the Nasdaq Composite finished in green. U.S. stock markets were closed on Monday to celebrate Presidents’ Day.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.4% or 129.84 points to close at 33,826.69. Notably, 17 components of the 30-stock index ended in positive territory while 13 in negative zone. The blue-chip index was down nearly 160 points at intraday low. The tech-heavy Nasdaq Composite finished at 11,787.27, sliding 0.6% due to weak performance of large-cap technology stocks.
The S&P 500 fell 0.3% to end at 4,079.09. Six out of 11 broad sectors of the benchmark index closed in positive territory while five in red. The Consumer Staples Select Sector SPDR (XLP) and the Utilities Select Sector SPDR (XLU) were up 1.3% and 1.1%, respectively. On the other hand, the Energy Select Sector SPDR (XLE) and the Technology Select Sector SPDR (XLK) were down 3.6% and 1.3%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 0.7% to 20.02. A total of 10.6 billion shares were traded on Friday, lower than the last 20-session average of 11.7 billion. The S&P 500 posted eight new highs and one new low while the Nasdaq recorded 75 new highs and 68 new lows.
Hot Inflation Data Raises Fear
Markets have been volatile over the past few sessions, as economic data released earlier this week suggested that the economy needs to traverse a tough path to bring soaring inflation under control. On Feb 16, another round of inflation data showed that the crisis is far from over.
January’s producer price index (PPI) report showed that wholesale inflation increased 0.7% month over month, which was higher than economists’ expectations of a rise of 0.4%. This is also the biggest jump since last summer, indicating that inflation is still quite high and is unlikely to ease soon. Core PPI, which excludes the volatile food and energy costs, increased 0.5%, the steepest rise in the past 10 months.
Thursday’s reports came just two days after the consumer price index (CPI) report showed that the cost of living rose 0.5% month over month in January. This was followed by solid retail sales data, indicating that spending is still high despite soaring prices.
Higher Rate Regime Likely to Extend
The fears of higher interest rate hikes were fueled further following comments from St. Louis Federal Reserve President James Bullard. He said that he had proposed a 50-basis point rate hike in the Fed’s last meeting and such a hike could be expected in the March meeting. Bullard’s sentiments were echoed by Cleveland Fed President Loretta Mester, saying that she also supports a steeper rate hike in the next meeting, which further weighed on stocks.
On Feb 17, Federal Reserve Governor Michelle Bowman said “I think there’s a long way to go before we reach our 2% inflation objective and I think we’ll have to continue to raise the federal funds rate until we see a lot more progress on that.”
Fearing prolonging higher interest rate regime, the ICE dollar Index rose 0.25% last week. The yield on the benchmark 10-Year U.S. Treasury Note rose 8.4 basis points last week to close at 3.827%. Consequently, share prices of rate-sensitive technology stocks, such as Microsoft Corp.(MSFT - Free Report) and Alphabet Inc. (GOOGL - Free Report) dropped 1.6% and 1.2%, respectively. Both stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Weekly Roundup
Last week was a mixed one for Wall Street. The Dow fell 0.1%, marking three consecutive weeks of decline. This happened for the first time since September 2022. The S&P 500 shed 0.3% posting losses for two successive weeks for the first time in 2023. However, the Nasdaq Composite rose 0.6% last week.
Stubbornly high inflation, strong economic data like nonfarm payrolls and retail sales and a possible extension of the higher interest rate regime unnerved sentiment.