Wall Street falls, remains close to record
NEW YORK — Stocks slipped Friday to send Wall Street to a rare losing week, just its second in the last 16.
The S&P 500 fell 0.5% from its alltime high set a day earlier. The Dow Jones Industrial Average dropped 145 points, or 0.4%, and the Nasdaq composite sank 0.8%.
A report in the morning on inflation at the wholesale level gave the latest reminder that the battle against rising prices still isn’t over. Prices rose more in January than economists expected, and the numbers followed a similar report from earlier in the week that showed living costs for US consumers climbed by more than forecast.
Treasury yields rose immediately after the report’s release, adding pressure onto the stock market.
The data kept the door closed on hopes that the Federal Reserve could begin cutting interest rates in March, as traders had earlier hoped. It also discouraged bets that a Fed move to relax conditions on the economy and financial markets could come even in May.
The yield on the 10-year Treasury climbed to 4.28% from 4.24% late Thursday. The two-year Treasury yield, which more closely tracks expectations for the Fed, touched its highest level since December.
Higher rates and yields make borrowing more expensive, which puts the brakes on the economy and hurts prices for investments.
Still, the recalibrated bets for cuts to rates have simply brought Wall Street’s forecasts closer to what the Federal Reserve has been outlining. Critics have been saying traders’ expectations had gone overboard in how quickly and how much the Fed could cut rates in
2024.
The wide expectation for the Fed’s next move is still for a cut to its main interest rate, which is at its highest level since 2001, as it’s said it likely will do.
“Markets are likely to take a well-deserved breather following a staggering rally since October, though the lack of emotional reaction to elevated inflation readings and shifting Fed expectations reflect the optimism of investors,” said Mark Hackett, Nationwide’s chief of investment research.