On Friday the U.S. stock market experienced a decline, with the S&P 500 falling by 1.2%, the Dow Jones Industrial Average dropping 1.1%, and the Nasdaq Composite decreasing by 1.5%.
The decrease is attributed to rising inflation concerns and the release of the Federal Reserve’s most closely watched inflation measure, which showed that price pressures have become more persistent. The decline also marks the worst week for the S&P 500 and Nasdaq since December 2022.
Friday marked the worst performance of the S&P 500 and Nasdaq since December.
Recent data confirms that inflation is not decreasing as quickly or as significantly as investors had hoped, despite prices stabilizing from their highest levels during the current inflation cycle.
Following the inflation reading, U.S. Treasury yields rose sharply, with the 2-year note soaring by 12 basis points to reach 4.81%, while the 10-year note increased by 7 basis points to exceed 3.95%.
The S&P 500 index (^GSPC) experienced a decline of 1.1%, whereas the Dow Jones Industrial Average (^DJI) dropped by 1%, equivalent to over 300 points. The Nasdaq Composite index (^IXIC), which is heavily focused on technology stocks, also slipped by 1.7%.
David Russell, Vice President of Market Intelligence at TradeStation said, “First December CPI was revised higher, and now each reading for January surprised to the upside. Inflation’s like an old boyfriend or girlfriend that keeps showing up when you don’t want to see them.”
Boeing, Warner Bros. Discovery, and used car retailer CVNA are among the companies that posted mixed financial results.
YahooFinance noted:
In individual stock moves, Block (SQ) rose 4.3% after the payments processor reported fourth-quarter financial results that saw profit and revenue top expectations.
Warner Bros. Discovery (WBD) shares fell 1% after the media giant posted a big revenue loss for the final three months of the year.
Boeing (BA) shares closed down 4.8% after the airline manufacturer said it paused deliveries of its 787 Dreamliner jets because of a documentation issue.
Beyond Meat’s (BYND) stock rallied 10% after better-than-expected earnings and CEO Ethan Brown said the company is seeing progress in its efforts to cut costs and manufacturing hurdles.
Beleaguered used car retailer (CVNA) plunged 20.5% after reporting a net loss that was nine times wider in the fourth quarter.
Boeing has paused deliveries of its 787 Dreamliner jets due to a new issue related to documentation. The company stated that the problem is not related to the plane’s design or manufacturing, and that it is working to resolve the issue with the Federal Aviation Administration (FAA).
Americans increased their retail spending in January by 5.3% compared to December 2021, despite the recent surge in COVID-19 cases and rising inflation. The increase was larger than analysts had anticipated and is being attributed to recent stimulus payments and vaccine distributions.
On the bright side the US labor market added 287,000 jobs in January 2023, surpassing economists’ expectations. The unemployment rate dropped to 3.8%, the lowest it has been since March 2020. However, concerns remain about the ongoing impact of the COVID-19 pandemic on the economy and the labor market. Additionally, wage growth remained relatively slow.
Morgan Stanley Chief Investment Officer Lisa Shalett mentioned earlier this week, “Equity bulls and even Chair Powell have bragged about anchored expectations for inflation and how consumers and investors believe it is moving in the right direction.”
She continued, “Given data crosscurrents, the central bank needs to tread carefully. Investors still wagering on a ‘Fed put; or quick return to financial repression are apt to be wrong this time. Fed credibility is on the line, and it is likely to risk overshooting rather than quitting the inflation fight too early.”