Michael M. Santiago
U.S. markets on Friday were on track to end mixed, as losses in megacap technology companies were offset by gains in energy stocks. For the week, Wall Street’s three major indices were set to end lower amid worries that the Federal Reserve would need to keep monetary policy tighter for longer.
Into the final hour of trading, the tech-heavy Nasdaq Composite (COMP.IND) was down 0.84% to 11,691.11 points, with FAANG stocks retreating across the board.
The benchmark S&P 500 (SP500) was higher by 0.03% to 4,082.86 points, while the blue-chip Dow (DJI) was up 0.37% to 33,823.04 points.
With a fall of nearly 1.3% for the week, the S&P was headed for its worst weekly performance of the new year, while the Nasdaq was on track to snap a five-week winning streak.
Of the 11 S&P sectors, eight were trading in the green, led by Energy. Consumer Discretionary and Communication Services were the top losers.
Treasury yields had inched up. The 10-year Treasury yield (US10Y) was up 7 basis point to 3.75%, while the 2-year yield (US2Y) was up 1 basis point at 4.52%.
This week has seen 2023’s breakneck rally lose some steam, with the initial catalyst for the loss of momentum coming in the form of last Friday’s explosive jobs report. Though Fed chief Jerome Powell on Tuesday calmed the markets by not appearing too hawkish in response to the jobs report, subsequent comments by a host of central bank speakers indicated that more rate hikes could very much be on the way.
“Although the S&P 500 is still above where it was before the FOMC last Wednesday, it does feel like more challenging markets for both risk and rates have been developing since the payrolls number two days later,” Deutsche Bank’s Jim Reid said.
In Thursday’s trading session, sentiment was dampened by worrying signals from the Treasury market in the form of the yield curve inversion falling to its widest point since 1981.
“After the strong 10yr auction on Wednesday, a weak 30-yr auction last night pushed yields higher across the curve in the last few hours of the session,” Reid explained.
“The only silver lining from the poor 30 year auction was that it prevented the 2s10s curve from closing at its most inverted for 42 years … Regardless of the brief respite, these curve levels are very extreme and at levels where a recession has always followed within months,” Reid added.
Turning to Friday’s economic calendar, the University of Michigan released its preliminary measure of February consumer sentiment. Data came in at 66.4 versus the the forecasted 65 figure.
Among active stocks, Lyft (LYFT) plunged on weak guidance.
Expedia (EXPE) slumped after missing expectations with its quarterly report. News Corp (NWS) (NWSA) also slid after disappointing earnings. Both companies were the top two percentage losers on the S&P 500 (SP500). Conversely, DexCom (DXCM) was the top S&P percentage gainer after its results were cheered.
Tesla (TSLA) slipped over 5% and, if the losses hold, is on track to snap an eight-day winning streak.
