S&P 500 ends down as investors fret about interest rates

Feb 17 (Reuters) – The S&P 500 ended decrease on Friday, weighed down by Microsoft and Nvidia as traders fearful that inflation and a powerful U.S. economic system may put the Federal Reserve on tempo for extra rate of interest hikes.

The see-saw session on Wall Road adopted financial knowledge this week that pointed to elevated inflation, a good job market and resilience in client spending, giving the Fed extra room for to boost borrowing prices.

Goldman Sachs and Financial institution of America forecast three extra price hikes this 12 months and by 1 / 4 of a share level every, up from their earlier estimate of two price rises.

Merchants expect at the very least two extra price will increase and see the Fed price peaking at 5.3% by July as central financial institution makes an attempt to chill the economic system and cut back inflation.

“A darkish cloud has drifted over the inventory market within the final two weeks primarily based on a better watermark for the Fed funds price,” mentioned Jake Dollarhide, chief government officer of Longbow Asset Administration in Tulsa, Oklahoma.

“The roles numbers do not get weaker, and it is exhausting to enter a recession with a powerful labor market on the identical time. Which means the Fed may push the button and transfer charges larger,” Dollarhide mentioned.

Microsoft Corp <MFST.O> fell 1.6% and Nvidia (NVDA.O) dipped 2.8%, each weighing on the S&P 500 because the yield on 10-year Treasury notes hit a three-month excessive.

The CBOE Volatility index (.VIX), also referred to as Wall Road’s worry gauge, traded above 20 factors for a second session in a row.

Of the 11 S&P 500 sector indexes, six rose, led by client staples (.SPLRCS), up 1.29%, adopted by a 1% achieve in Utilities (.SPLRCU). Vitality dropped 3.65%, with Exxon Mobil dropping 3.8%.

The S&P 500 declined 0.28% to finish the session at 4,079.09 factors.

The Nasdaq fell 0.58% to 11,787.27 factors, whereas Dow Jones Industrial Common rose 0.39% to 33,826.69 factors.

For the week, the S&P 500 fell 0.3%, the Dow misplaced 0.1% and the Nasdaq climbed 0.6%.

The S&P 500 has gained about 6% to this point in 2023, whereas the Nasdaq has rebounded about 13% following deep losses final 12 months.

Including to current worries about financial coverage, Fed Governor Michelle Bowman mentioned the central financial institution might want to maintain elevating rates of interest till it makes way more progress tackling inflation. Richmond Fed President Thomas Barkin mentioned the central financial institution nonetheless wants to boost rates of interest, however that it may stick to quarter-point will increase.

Moderna Inc <MRNA.O> fell 3.3% after its experimental messenger RNA-based influenza vaccine delivered combined ends in a examine.

Deere & Co (DE.N) surged 7.5% after the world’s largest farm tools maker raised its annual revenue and beat quarterly earnings expectations.

Lithium miners Livent Corp (LTHM.N), Albemarle Corp (ALB.N) and Piedmont Lithium Inc (PLL.O) slumped between 10% and 12% as a consequence of considerations about weak point in Chinese language costs for the EV battery metallic.

Probably the most traded firm within the S&P 500 was Tesla Inc , with $42.9 billion value of shares exchanged in the course of the session. The shares rose 3.10%.

U.S. inventory markets will probably be closed on Monday on account of Presidents’ Day.

Advancing points outnumbered falling ones inside the S&P 500 (.AD.SPX) by a 1.1-to-one ratio.

The S&P 500 posted eight new highs and one new low; the Nasdaq recorded 75 new highs and 68 new lows.

Quantity on U.S. exchanges was comparatively mild, with 10.6 billion shares traded, in contrast with a mean of 11.7 billion shares over the earlier 20 classes.

Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru; Modifying by Marguerita Choy

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