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PCE index up 0.6% m-o-m in Jan after 0.2% rise in Dec
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Boeing slides on 787 Dreamliner jets temporary halt
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Adobe falls as DoJ to block Figma deal - report
(New throughout, updates prices, market activity and comments
to close)
By David French
Feb 24 (Reuters) - Wall Street closed well down on
Friday, dragging all three main stock indexes to their biggest
weekly drop of 2023, as investors braced for the possibility of
more aggressive rate hikes from the U.S. Federal Reserve as U.S.
economic data pointed to resilient consumers.
All three indexes posted weekly declines of around 3%, with
the blue-chip Dow Jones Industrial Average on track for
its biggest weekly decline in five months.
After a strong January, stocks have retreated this month as
a slew of economic data amplified worries that the U.S. central
bank might have to keep rates higher for longer.
Data on Friday showed the personal consumption expenditures
(PCE) price index, the Fed's preferred inflation gauge, shot up
0.6% last month after gaining just 0.2% in December. Consumer
spending, which accounts for more than two-thirds of U.S.
economic activity, jumped 1.8% last month, exceeding forecasts
for a 1.3% rise.
"The headline and core PCE numbers were well above
expectations. What worries us most is that the data since the
last Fed meeting has been extremely strong," said Gene Goldman,
chief investment officer at Cetera Investment Management.
"If the Fed had this data at the last meeting they probably
would've raised by 50 bps and the tone from the press conference
would've been a lot different."
Traders of futures tied to the Fed's policy rate added to
bets of at least three more rate hikes this year, with the peak
rate seen in the range of 5.25%-5.5% by June.
Cleveland Fed President Loretta Mester said the Fed should
raise interest rates higher than necessary if need be to get
inflation fully under control.
According to preliminary data, the S&P 500 lost 41.90
points, or 1.04%, to end at 3,970.42 points, while the Nasdaq
Composite lost 195.52 points, or 1.67%, to 11,394.88.
The Dow Jones Industrial Average fell 335.47 points, or
1.01%, to 32,818.44.
Most of the major S&P sectors fell, with technology and consumer discretionary among the biggest
decliners. Communication services fell to a sixth
straight loss, its worst run since a similar six-session skid in
August.
Megacap stocks including Tesla Inc , Amazon.com Inc and Nvidia Corp slid as Treasury yields rose. The yield on two-year Treasury notes , which are
highly sensitive to Fed policy, climbed to 4.826% - its highest
in nearly four months. Boeing Co slid after the Federal Aviation
Administration said the planemaker temporarily halted deliveries
of its 787 Dreamliner jets.
Adobe Inc sank on reports the U.S. Justice
Department would block the Photoshop maker's $20 billion bid for
cloud-based designer platform Figma.
On the positive side, Beyond Meat Inc surged as the
plant-based meat maker's results indicated that its cost-control
measures were finally bearing fruit.
Block Inc gained after offering an upbeat forecast
for a key profit metric and noting it was slowing hiring to
control costs this year.
(Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru
and David French in New York; Additional reporting by Sinead
Carew; Editing by Arun Koyyur, Sriraj Kalluvila and David
Gregorio)
