US stocks slump; S&P 500 has its worst week since February
>> Stocks sank again on Wall Street Friday, knocking the S&P 500 to its worst weekly loss since February, as more steam comes out of banks and other stocks that soared earlier this year with expectations for the economy and inflation.
The S&P 500 fell 55.41 points, or 1.3%, to 4,166.45 in a widespread slump. It was the worst day for the index in a month as unease grows about the Federal Reserve making plans to eventually offer less help to markets.
The Dow Jones Industrial Average lost 533.37 points, or 1.6%, to 33,290.08, and the Nasdaq composite fell 130.97, or 0.9%, to 14,030.38.
Investors are still recalibrating their moves following the Federal Reserve’s signal this week that it may raise short-term interest rates twice by late 2023, earlier than expected. The Fed also began talks about slowing its bond-buying program that’s helping to keep longerterm rates low. On Friday, St. Louis Federal Reserve President James Bullard said on CNBC his personal prediction was that the first rate increase may come as soon as next year.
It’s an acknowledgment that a rebounding economy with near-record prices for homes and stocks may not need super low rates much longer. A recent burst of inflation may also be upping the pressure. But any pullback in Fed support would be a big change for markets, which have been feasting on ultra-low rates for more than a year. It marked a “U-turn on Easy Street,” as strategists at BofA Global Research described it.
That’s hurt stocks of banks, oil producers and
other companies whose profits are closely tied to the strength of the economy in particular. On the other side, stocks of companies able to grow almost regardless of the economy’s fortunes have held up better.
The Dow Jones Industrial Average, which is full of companies whose profits move more with the economy, lost 3.5% this past week. That’s its worst since October. The Nasdaq composite, which has more high-growth tech stocks, dipped a much more modest 0.3%.
Of course, all the major U.S. stock indexes remain relatively close to their record highs, as the economy continues to leap out of the recession caused by the pandemic. The S&P 500 is only about 2% below its all-time high set on Monday, and the
Dow is within 5% of its record set last month.