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Defensive stocks limit market losses
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Moderna slides after mixed data from flu vaccine trial U.S. markets closed on Monday for Presidents' Day
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Indexes down: Dow 0.18%, S&P 0.91%, Nasdaq 1.41%
(Updates prices, details; adds comments)
By Johann M Cherian and Sruthi Shankar
Feb 17 (Reuters) - U.S. stock indexes fell on Friday,
weighed down by energy and megacap growth names, as investors
worried that inflation and signs of strength in the U.S. economy
could put the Federal Reserve on pace for more interest rate
hikes.
Wall Street indexes turned volatile this week following a
strong start to 2023 as economic data pointed to elevated
inflation, a tight job market and resilience in consumer
spending, giving the Fed more room for to raise borrowing costs.
Goldman Sachs and Bank of America forecast three more rate
hikes this year and by a quarter of a percentage point each, up
from their previous estimate of two rate rises.
Traders are expecting at least two more rate increases and see the Fed rate peaking at 5.3% by July. "Anything strong in terms of data is a sign of an overheated economy, where the Fed is going to have to continue to raise interest rates, either pushing them higher or keeping them higher for longer," Robert Pavlik, senior portfolio manager at Dakota Wealth said. "So investors feel that the central bank is going to kill the economy by jacking rates up too many times." Seven of the 11 major S&P sectors were lower, with energy stocks sliding 3.6% as oil prices tumbled almost 3%. Rate-sensitive megacap names like Microsoft Corp , Apple Inc and Amazon.com Inc lost more than 1% as the yield on 10-year Treasury notes hit a three-month high. Defensive sectors, which tend to outperform during economic uncertainty, such as healthcare , consumer staple and utilities gained.
The CBOE Volatility index , also known as Wall Street's fear gauge, traded above 20 points for a second session in a row. At 12:51 p.m. ET, the Dow Jones Industrial Average was down 60.12 points, or 0.18%, at 33,636.73, the S&P 500 was down 37.34 points, or 0.91%, at 4,053.07, and the Nasdaq Composite was down 167.37 points, or 1.41%, at 11,688.46. Adding to the gloom, Richmond Fed president Thomas Barkin and Fed governor Michelle Bowman joined the chorus of officials advocating for more rate hikes.
Moderna Inc fell 5% after its experimental messenger RNA-based influenza vaccine delivered mixed results in a study. Deere & Co surged 7.6% after the world's largest farm equipment maker raised its annual profit and beat quarterly earnings expectations. Lithium miners Livent Corp , Albemarle Corp and Piedmont Lithium Inc fell between 9% and 13% due to weakness in Chinese price for the EV battery metal.
U.S. markets will be closed on Monday on account of Presidents' Day. Declining issues outnumbered advancers for a 2.08-to-1 ratio on the NYSE and 1.36-to-1 ratio on the Nasdaq. The S&P index recorded six new 52-week highs and one new low, while the Nasdaq recorded 55 new highs and 54 new lows. (Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru; Editing by Alden Bentley, Anil D'Silva, Sriraj Kalluvila and Arun Koyyur)
