S&P 500, Nasdaq notch biggest weekly losses since March
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[September 23, 2023] By
Stephen Culp
NEW YORK (Reuters) - Wall Street see-sawed to a lower close on Friday,
capping a tumultuous week during which benchmark Treasury yields hit
16-year highs and investors digested the Federal Reserve's hawkish
outlook revisions.
All three major U.S. stock indexes oscillated for much of the session
but ended red.
All three posted weekly losses, with the S&P 500 and the Nasdaq
registering their largest Friday-to-Friday percentage drops since March.
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."
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Benchmark U.S. 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 2% 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.
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Traders work on the floor of the New York Stock Exchange (NYSE) in
New York City, U.S., August 15, 2023. REUTERS/Brendan McDermid
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The Dow Jones Industrial Average fell 106.58 points, or 0.31%, to
33,963.84, the S&P 500 lost 9.94 points, or 0.23%, to 4,320.06 and
the Nasdaq Composite dropped 12.18 points, or 0.09%, to 13,211.81.
Among the 11 major sectors of the S&P 500, consumer discretionary
suffered the steepest percentage loss, while tech and energy were
the only gainers.
Ford Motor Co gained 1.9% after the striking United Auto Workers
union reported progress in talks with the automaker.
Activision Blizzard added 1.7% 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.
U.S.-listed shares of Chinese firms including PDD Holdings, JD.com,
Li Auto and Baidu rose between 2% and 4% on signs of an economic a
rebound, while Alibaba jumped 5.0% after Bloomberg reported that
report the company's logistics arm Cainiao was planning to file for
a Hong Kong IPO as soon as next week.
Declining issues outnumbered advancing ones on the NYSE by a
1.12-to-1 ratio; on Nasdaq, a 1.29-to-1 ratio favored decliners.
The S&P 500 posted one new 52-week high and 35 new lows; the Nasdaq
Composite recorded 33 new highs and 321 new lows.
Volume on U.S. exchanges was 9.47 billion shares, compared with the
10.09 billion average for the full session over the last 20 trading
days.
(Reporting by Stephen Culp; Additional reporting by Ankika Biswas
and Shristi Achar A in Bengaluru; Editing by David Gregorio)
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