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.
Sign up for Kiplinger’s Free E-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
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.
-
Stock Market Today: Stocks Soar on Apple Buyback News, Jobs Data
The main indexes rallied hard to end the week thanks to Apple's $110 billion stock repurchase plan and a big April payrolls miss.
By Karee Venema Published
-
Three Hidden Costs of Health Savings Accounts (HSAs)
Health Savings HSAs offer valuable tax benefits, but hidden costs can erode those advantages.
By Kelley R. Taylor Last updated
-
Stock Market Today: Stocks Soar on Apple Buyback News, Jobs Data
The main indexes rallied hard to end the week thanks to Apple's $110 billion stock repurchase plan and a big April payrolls miss.
By Karee Venema Published
-
Stock Market Today: Stocks Sizzle Ahead of Apple Earnings, Jobs Report
The Nasdaq outperformed in a strong day for stocks thanks to Qualcomm's post-earnings pop.
By Karee Venema Published
-
Stock Market Today: Stocks Pop Then Drop After Fed Meeting
Stocks went on a roller-coaster ride after Fed Chair Powell said interest rates were likely at a sufficiently restrictive level.
By Karee Venema Published
-
Fed Holds Rates Steady at 23-Year High: What the Experts Are Saying
Federal Reserve The Federal Reserve struck a dovish pose even as it kept interest rates unchanged for a sixth straight meeting.
By Dan Burrows Published
-
Stock Market Today: Stocks Sell Off Ahead of Fed Decision
Stocks sold off sharply Tuesday as anxiety set in ahead of Wednesday's policy statement from the Federal Reserve.
By Karee Venema Published
-
Stock Market Today: Markets Post Broad-Based Gains Thanks to Mega-Cap Tech
Stocks get help from a couple of laggard Magnificent 7 stocks.
By Dan Burrows Published
-
Stock Market Today: Markets Soar Amid Strong Earnings for Big Tech
Equities ended the week on an up note thanks to some of the market's biggest names.
By Dan Burrows Published
-
Stock Market Today: Markets Tumble Amid Slower Economic Growth and Rising Prices
Disappointing readings on GDP and inflation helped tank equities.
By Dan Burrows Published