new york –
Stocks plunged on Friday as disappointing evidence continued to mount on Wall Street that inflation has not cooled as quickly as hoped.
The S&P 500 is on track for its worst week since early December, down 1.6% in morning trading. As of 10:19 a.m. ET, the Dow Jones Industrial Average is down 451 points (1.4%) to 32,702, while the Nasdaq Composite is down his 2%.
Stocks fell through February as a series of reports showed everything from inflation to the job market to spending by shoppers was hotter than expected. This has forced Wall Street to raise its expectations of how high interest rates the Federal Reserve will have to go and how long it will stay so.
Higher interest rates may depress inflation, but they also increase the risk of a recession as they slow the economy. Similarly, it affects the price of stocks and other investments.
The latest reminder was released on Friday with reports that the Fed’s preferred rate of inflation has beaten expectations. After ignoring food and energy costs, January prices were 4.7% higher year-on-year. This was an acceleration from his December inflation rate, showing the wrong momentum and higher than economists’ expectations of his 4.3%.
This echoes other reports earlier in the month that showed inflation was higher than expected in January at both the consumer and wholesale levels.
Other data on Friday showed consumer spending turned positive in January, jumping 1.8% from December. This is very important as spending by consumers is the largest part of the economy. Another measure of consumer sentiment was slightly better than expected, with sales of new homes slightly better than expected.
Such strength combined with a highly resilient job market raises hopes that the economy can avoid a recession in the short term.
But it could also lead to upward pressure on inflation, which Wall Street fears could prompt the Fed to raise rates and hold rates for longer than they otherwise would. . Investor hopes of a possible rate cut this year have faded from the market.
Traders are now betting that the Fed will raise the key overnight rate above 5.25% and hold it until the end of the year. That’s a higher amount than the Fed announced in his December.
Yields in the US Treasury market rose this month and even higher on Friday on hopes of a stronger Federal Reserve (Fed) performance.
Yields on 10-year government bonds rose to 3.95% from 3.89% late Thursday. Helps set interest rates for mortgages and other important loans. The 2-year yield was heavily driven by expectations for the Fed, rising from 4.71% to 4.78% for him.
Tech and high-growth stocks again bore the brunt of the pressure. He is one of the most vulnerable to rising interest rates, the investments that are seen as the most expensive, risky, or that keep investors waiting the longest for significant growth.
Apple, Microsoft, Amazon, Tesla and Nvidia all fell by more than 2% and were the most heavily weighted companies in the S&P 500.
They were among many companies in the Wall Street cleanup. Over 90% of his stocks in the S&P 500 have fallen.
Software company Autodesk suffered one of the biggest losses in the index, down 10.6%, despite reporting stronger-than-expected gains and earnings in recent quarters. Analysts said investors were disappointed with the outlook for future earnings.
Boeing lost 4.4% after it again halted deliveries of 787 airliners due to questions about a supplier’s analysis of parts near the front of the aircraft.
Overseas stock markets also fell for the most part, with France’s main index down 1.1% and Hong Kong’s down 1.7%.
Japan’s Nikkei 225 was an outlier, up 1.3%. Economist Kazuo Ueda, who has been nominated as governor of Japan’s central bank, told lawmakers he supports keeping Japan’s base interest rate near zero to ensure stable growth. That’s even though Japan reported its core consumer price index, excluding volatile fresh food, rose the most in 41 years in January.
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Contributed by AP business writers Elaine Kurtenbach, Matt Ott and Yuri Kageyama
