Stocks fell again on Friday’s Wall Street, holding back the worst weekly decline in the S & P 500 since the start of the pandemic.
Investors are increasingly concerned about rising inflation and how aggressively the Federal Reserve will raise interest rates in order to lower them. Historically low interest rates have helped support a wider market, as the economy absorbed a sharp blow from the pandemic in 2020 and has recovered over the next two years.
The S & P 500 fell 84.79 points (1.9%) to 4,397.94. The Benchmark Index fell for the third straight week earlier this year. It fell 5.7% this week. This is the worst weekly decline since March 2020, when the pandemic sent stocks to the bear market.
The Dow Jones Industrial Average fell 450.02 points (1.3%) to 34,265.37, down for the third straight week.
High-tech heavy Nasdaq decreased by 385.10 (2.7%) to 13,768.92. Investors expect the Fed to start raising rates as soon as it reaches its March policy meeting, so stocks of expensive tech companies and other expensive growth stocks should be relatively unattractive. I can see it. The index has fallen for four consecutive weeks and is now more than 10% below its recent highs, what Wall Street considers to be a market correction. Nasdaq is down 14.3% from the record high set on November 19.
“As always, when volatility begins, investors focus on exacerbating downward volatility,” said Nancy Tengler, CEO of Laffer Tengler Investments.
Technology and telecommunications stocks were the biggest stumbling block in the Friday market. Streaming video service Netflix plunged 21.8% after another quarter increase in subscribers. Disney, which is also trying to expand its streaming service subscriber base, fell 6.9%.
Treasury yields plummeted as investors turned to safer investments. Yields on 10-year Treasuries fell from 1.83% late Thursday to 1.76%. The fall weighed heavily on bank stocks. Bank stocks rely on higher yields to impose more favorable interest rates on loans. Wells Fargo was down 2.4% and Bank of New York Mellon was down 4.6%.
Concerns about inflation and the impact of high interest rates prompted a shift to a wider market after the strong rise in 2021. Technology stocks and consumer-centric companies have lost support. Energy is the only S & P 500 sector showing profits. Household goods manufacturers and utilities are usually considered low-risk investments and are more durable than other markets.
Supply chain issues and rising raw material costs have led companies in a variety of industries to raise prices for finished products. Many of these companies warn investors that profit margins and businesses will continue to be in a pinch in 2022.
Rising costs have raised concerns that consumers will begin to ease spending due to persistent pressure on their wallets. Government retail sales data for December showed an unexpected decline in spending.
The Federal Reserve is expected to raise interest rates faster and more often than previously suggested to combat rising inflation, which could impede further economic recovery. The Fed’s benchmark short-term interest rates are currently in the range of 0% to 0.25%. Investors now see a nearly 70% chance that the Fed will raise interest rates by at least 1 percentage point by the end of the year, according to CME Group’s FedWatch tool.
Bill Northey, Senior Investment Director at US Bank Wealth Management, said:
Investors are watching closely when Fed officials meet for the latest policy meeting next week. Some economists are concerned that central banks are delaying their actions to combat inflation. Consumer prices rose 7% year-on-year in December, the largest rise in nearly 40 years.
“In our view, the biggest short-term risk is right in front of us. The Fed is seriously behind the curve and we need to take the fight against inflation seriously,” leads Ethan Harris. The BofA Global Research economist wrote in the report. “It’s been a long time since the market had to deal with the federal government fighting severe inflation.”
Investors are also busy reviewing the latest rounds of corporate profits, which gives them a better understanding of how companies deal with lasting supply chain issues and higher costs. increase.
Paints and coatings maker PPG Industries fell 3.1% after warning investors that it continues to address high raw material costs and supply chain issues. Surgical instrument maker Intuitive Surgical decreased by 7.9% after warning that other procedures were delayed due to the focus on the case of COVID-19.
Peloton rose 11.7% after aerobike and treadmill makers said second-quarter sales met previous estimates. Inventory was put in tank the day after CNBC reported that Peloton had temporarily suspended production of exercise equipment to stop the decline in sales.
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Stock prices have fallen, the worst week since March 2020. Netflix tank
Source link Stock prices have fallen, the worst week since March 2020. Netflix tank