Stock Market Today: Stocks Lose Steam as Fed Hangover Lingers
Stocks attempted to bounce back from recent Fed-induced losses Friday, but struggled to stay higher through the close.
Stocks spent most of the day in positive territory Friday as Treasury yields retreated. The major indexes lost steam, however, as investors continued to fret about higher-for-longer interest rates and took in new developments on the United Auto Workers (UAW) strike.
At the close, the Dow Jones Industrial Average was down 0.3% at 33,963, while the S&P 500 (-0.2% at 4,320) and the Nasdaq Composite (-0.1% at 13,211) were also modestly lower. All three indexes ended Friday with substantial weekly losses as concern over the Federal Reserve's future monetary plans sent Treasury yields to a nearly two-decade high.
Specifically, while the Fed on Wednesday kept interest rates unchanged, it left open the door to another quarter-point rate hike this year and indicated it will keep rates higher for longer in order to bring down inflation.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Earlier today, Boston Fed President Susan Collins and Fed Governor Michelle Bowman both signaled support for tighter monetary policy to combat still-too-high inflation.
However, Douglas Porter, chief economist, at BMO Economics isn't too worried about more rate hikes. "There's plenty more economic data to go before the next meeting, and new risks are emerging for the growth outlook," Porter says. "Overall, we believe short-term rates are now restrictive enough to do the job, and the pronounced back-up in long-term yields adds another layer of tightening."
Higher prices weigh on PMI data
In today's economic news, purchasing managers index (PMI) data from S&P Global showed activity in the services sector grew at a more moderate pace than was expected. Additionally, activity in the manufacturing sector contracted at a slower rate than economists were anticipating.
"Weighing most on both figures were contractions in ordering, as consumers balked at higher prices," says José Torres, senior economist at Interactive Brokers. "Loftier prices were driven mainly by increases in compensation outlays, interest costs, materials expenses and fuel charges."
Ford stock pops on strike negotiation progress
Meanwhile, the UAW said it expanded its strike to 38 General Motors (GM, -0.4%) and Stellantis (STLA, +0.2%) plants across 20 states. The union said it will not strike at any additional Ford Motors (F, +1.9%) plants for the time being, as negotiations between the two sides are making progress, according to UAW President Shawn Fain.
Next week has the potential to be a volatile one, given it marks the end of both the month and the quarter. The Friday morning release of the personal consumption and expenditures (PCE) index – the Fed's preferred measure of inflation – and increasing chatter surrounding a potential government shutdown could keep investors on their toes.
Related content
-
Is Home Insurance Tax Deductible?With home insurance rates on the rise, you might be hoping to at least claim the cost as a tax deduction. Here's what you need to know ahead of tax season.
-
The December Jobs Report Is Out. Here's What It Means for the Next Fed MeetingThe December jobs report signaled a sluggish labor market, but it's not weak enough for the Fed to cut rates later this month.
-
Trump Signals Plan to Ban Institutional Investors From Buying Single-Family HomesThe president says the move could improve housing affordability. Here’s what the data shows about investor ownership, recent buying trends and what it could mean for homebuyers.
-
If You'd Put $1,000 Into Lowe's Stock 20 Years Ago, Here's What You'd Have TodayLowe's stock has delivered disappointing returns recently, but it's been a great holding for truly patient investors.
-
If You'd Put $1,000 Into 3M Stock 20 Years Ago, Here's What You'd Have TodayMMM stock has been a pit of despair for truly long-term shareholders.
-
If You'd Put $1,000 Into Coca-Cola Stock 20 Years Ago, Here's What You'd Have TodayEven with its reliable dividend growth and generous stock buybacks, Coca-Cola has underperformed the broad market in the long term.
-
If You Put $1,000 into Qualcomm Stock 20 Years Ago, Here's What You Would Have TodayQualcomm stock has been a big disappointment for truly long-term investors.
-
If You'd Put $1,000 Into Home Depot Stock 20 Years Ago, Here's What You'd Have TodayHome Depot stock has been a buy-and-hold banger for truly long-term investors.
-
What the Rich Know About Investing That You Don'tPeople like Warren Buffett become people like Warren Buffett by following basic rules and being disciplined. Here's how to accumulate real wealth.
-
If You'd Put $1,000 Into Bank of America Stock 20 Years Ago, Here's What You'd Have TodayBank of America stock has been a massive buy-and-hold bust.
-
If You'd Put $1,000 Into Oracle Stock 20 Years Ago, Here's What You'd Have TodayORCL Oracle stock has been an outstanding buy-and-hold bet for decades.
