The U.S. stock market experienced a mixed finish on Friday, with the S&P 500 closing little changed after an early gain. This led to the market’s first losing week since early September, with the benchmark index ending the week 1% lower. Both the Dow Jones Industrial Average and Nasdaq composite also posted their first weekly losses after several weeks of gains. Stocks have been falling back from record highs, with concerns about high valuations and higher Treasury yields making them less appealing to investors. Mark Hackett, chief of investment research at Nationwide, noted that the market is exhibiting signs of exhaustion following a steady upward trend.
Company earnings reports remained a key focus for investors, with solid results helping to drive stock prices higher. Capital One Financial and Deckers Outdoor were among the companies that saw gains after beating Wall Street’s third-quarter financial forecasts. Technology companies like L3Harris Technologies and Western Digital also saw increases in their stock prices. However, there were notable declines as well, such as Capri Holdings losing almost half its value after a judge halted a purchase by Tapestry. McDonald’s also lost ground due to a deadly outbreak of E. coli poisoning tied to its products.
Treasury yields were higher, with the 10-year Treasury yield rising above 4%, indicating a stronger U.S. economy than expected. The Federal Reserve has raised its benchmark interest rate to its highest level in two decades to combat inflation without causing a recession. Economists expect inflation to ease to 2%, with the central bank likely to make further interest rate cuts in the near future. In global markets, Russia’s central bank raised its key interest rate to combat growing inflation caused by military spending after the invasion of Ukraine. European markets saw mixed results, with Germany’s DAX rising slightly, France’s CAC 40 losing ground, and Britain’s FTSE 100 edging lower.
Looking ahead, Wall Street will have updates next week on consumer confidence, jobs, and inflation, which will provide further insights into the state of the economy. The Fed’s efforts to tame inflation while avoiding a recession will continue to be closely watched by investors. Economists are anticipating another interest rate cut at the Fed’s meeting in November. Additionally, a key report on consumer spending, the PCE, is expected to show a lower rate of inflation. Despite global economic challenges, the U.S. economy has so far managed to weather the impact of inflation and high interest rates without severe consequences. Market participants will continue to monitor developments in the coming weeks to assess the overall health of the economy and its impact on stock market performance.
