Wall Street’s major stock markets fell on Friday as people worry that prices will remain high, which could change when the government decides to change interest rates. This concern rattled interest rate-sensitive stocks ahead of next week’s government meeting.
On Thursday, the market fell after the government released data showing prices for products manufactured by companies were higher than expected. This made people more concerned about rising prices and caused the interest rate for borrowing money over ten years to reach a peak not seen in two weeks.
Traders were betting the government would cut interest rates in June, but fewer now think that will happen. Last week, around 73% of traders were betting on a rate cut, but now only around 57% believe it will happen. This information comes from a tool called the CME FedWatch Tool.
Now everyone is waiting to see what the government will decide at its meeting next week. They want to know if and when the government will change interest rates.
Russell Hackmann, who works at Hackmann Wealth Partners, said people are really interested in what the government will say about interest rates and how it will affect future decisions.
More bad news came when data showed that factories in the US made more things in February than expected, but the previous month’s data was changed to show that factories were not doing as well as people thought. This means that factories are still having a tough time because interest rates are high.
A report from the University of Michigan showed that people are not feeling as good about the economy this month as expected.
Friday was also the day when contracts for certain types of investments ended at the same time. This is called “triple witchcraft.”
As of 10:02 a.m. ET, the Dow Jones Industrial Average was down 149.00 points, the S&P 500 was down 33.83 points, and the Nasdaq Composite was down 141.76 points.
Most S&P 500 sectors were trading lower, with information technology seeing the most significant drop, down 1.4%. Several mega-cap growth stocks, including Microsoft and Nvidia, faced downward pressure.
Semiconductor stocks, after enjoying a three-week winning streak, fell 0.8%, with investors closely monitoring the upcoming GTC global developer conference for AI-related announcements.
Micron Technology, however, saw a 1.9% rise after brokerage Citi raised its price target for the company, marking the highest target on Wall Street for the chipmaker.
By contrast, Adobe shares fell 13.7% after forecasting second-quarter revenue below analyst expectations due to increased competition and weak demand for its AI-enabled products.
Ulta Beauty also saw a 6.7% drop after projecting full-year earnings below Wall Street estimates, citing elevated supply chain costs and stepped up promotional activities.
In the midst of earnings season, about 76.1% of S&P 500 companies that have reported quarterly earnings so far have surpassed analyst expectations.
On the New York Stock Exchange, stocks that rose slightly outnumbered those that fell, while on the Nasdaq, those that fell slightly outnumbered those that advanced. The S&P index recorded 14 new 52-week highs, while the Nasdaq recorded 24 new highs and 71 new lows.
Also read: Dollar gains momentum, yen weakens ahead of key central bank meetings