S&P 500 ends down as investors fret about interest rates
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[February 18, 2023] By
Noel Randewich
(Reuters) - The S&P 500 ended lower on Friday, weighed down by Microsoft
and Nvidia as investors worried that inflation and a strong U.S. economy
could put the Federal Reserve on pace for more interest rate hikes.
The see-saw session on Wall Street followed economic data this week that
pointed to elevated inflation, a tight job market and resilience in
consumer spending, giving the Fed more room for to raise borrowing
costs.
Goldman Sachs and Bank of America forecast three more rate hikes this
year and by a quarter of a percentage point each, up from their previous
estimate of two rate rises.
Traders are expecting at least two more rate increases and see the Fed
rate peaking at 5.3% by July as central bank attempts to cool the
economy and reduce inflation.
"A dark cloud has drifted over the stock market in the last two weeks
based on a higher watermark for the Fed funds rate," said Jake
Dollarhide, chief executive officer of Longbow Asset Management in
Tulsa, Oklahoma.
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"The jobs numbers aren't getting weaker, and it's hard to go into a
recession with a strong labor market at the same time. That means the
Fed could push the button and move rates higher," Dollarhide said.
Microsoft Corp <MFST.O> fell 1.6% and Nvidia dipped 2.8%, both weighing
on the S&P 500 as the yield on 10-year Treasury notes hit a three-month
high. [US/]
The CBOE Volatility index, also known as Wall Street's fear gauge,
traded above 20 points for a second session in a row.
Of the 11 S&P 500 sector indexes, six rose, led by consumer staples, up
1.29%, followed by a 1% gain in Utilities. Energy dropped 3.65%, with
Exxon Mobil losing 3.8%.
The S&P 500 declined 0.28% to end the session at 4,079.09 points.
The Nasdaq fell 0.58% to 11,787.27 points, while Dow Jones Industrial
Average rose 0.39% to 33,826.69 points.
For the week, the S&P 500 fell 0.3%, the Dow lost 0.1% and the Nasdaq
climbed 0.6%.
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A trader works on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., February 17,
2023. REUTERS/Brendan McDermid
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The S&P 500 has gained about 6% so far in 2023, while the Nasdaq has
rebounded about 13% following deep losses last year.
Adding to recent worries about monetary policy, Fed Governor
Michelle Bowman said the central bank will need to keep raising
interest rates until it makes much more progress tackling inflation.
Richmond Fed President Thomas Barkin said the central bank still
needs to raise interest rates, but that it could stick with
quarter-point increases.
Moderna Inc <MRNA.O> fell 3.3% after its experimental messenger
RNA-based influenza vaccine delivered mixed results in a study.
Deere & Co surged 7.5% after the world's largest farm equipment
maker raised its annual profit and beat quarterly earnings
expectations.
Lithium miners Livent Corp, Albemarle Corp and Piedmont Lithium Inc
slumped between 10% and 12% due to concerns about weakness in
Chinese prices for the EV battery metal.
The most traded company in the S&P 500 was Tesla Inc, with $42.9
billion worth of shares exchanged during the session. The shares
rose 3.10%.
U.S. stock markets will be closed on Monday on account of
Presidents' Day.
Advancing issues outnumbered falling ones within the S&P 500 by a
1.1-to-one ratio.
The S&P 500 posted eight new highs and one new low; the Nasdaq
recorded 75 new highs and 68 new lows.
Volume on U.S. exchanges was relatively light, with 10.6 billion
shares traded, compared with an average of 11.7 billion shares over
the previous 20 sessions.
(Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru;
Editing by Marguerita Choy)
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