Wall Street has see-sawed, and closed slightly lower after a tumultuous week during which benchmark Treasury yields hit 16-year highs as investors digested the Federal Reserve’s hawkish outlook revisions.
All three major US stock indexes oscillated for much of the session and posted weekly losses.
On Thursday, the S&P 500 dipped below its 100-day moving average – a key support level – for the first time since March, its failure to break above that level suggests the index is still under downward pressure.
“This week is about some Fed messaging colliding with overly optimistic equity investors,” said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.
Hill added that investors have “wanted to trade peak interest rates for almost a year now.”
But he said it was clear in remarks this week by Fed Chair Jerome Powell “and in the dot plot that the Fed doesn’t think we’re there yet.”
“This week’s stock action has been about digesting that reality,” Hill said.
Benchmark US Treasury yields retreated from 16-year highs as investors turned their focus from hawkish Fed guidance to key economic data waiting in the wings.
Investors were still digesting the Fed’s decision to let its key interest rate stand, but update its quarterly Summary Economic Projections to suggest restrictive monetary policy will remain in place longer than previously anticipated.
On Friday, remarks from Fed Governor Michelle Bowman supported the FOMC hawks, suggesting the Fed funds target rate should be raised further and held “at a restrictive level for some time” to bring inflation down to the central bank’s two per cent target.
“There are a lot of factors working against a soft landing and that’s something the Fed needs to be reminded of, because pushing rates higher could push us into recession,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
According to preliminary data, the S&P 500 lost 10.75 points, or 0.25 per cent, to end at 4,319.25 points, while the Nasdaq Composite lost 12.18 points, or 0.09 per cent, to 13,211.81. The Dow Jones Industrial Average fell 106.91 points, or 0.31 per cent, to 33,963.51.
Ford Motor Co advanced after the striking United Auto Workers union reported progress in talks with the automaker.
Activision Blizzard rose in the wake Britain’s antitrust regulator’s statement that Microsoft Corp’s restructured $69 billion acquisition of the company by “opens the door” to the biggest-ever gaming deal being cleared.
US-listed shares of Chinese firms including PDD Holdings , JD.com, Li Auto and Baidu gained on signs of an economic a rebound, while Alibaba jumped in the wake of a report that the company’s logistics arm Cainiao was planning to file for a Hong Kong IPO as soon as next week.
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