U.S. stocks ended mostly lower on Friday as investors digested a hectic week of mixed earnings and economic data that supported the “higher for longer” interest rate scenario. Investors were also focused on geopolitics, with the escalation of Israel’s conflict with Hamas and growing fears about a U.S. government shutdown weighing on sentiment.
Tech and tech-adjacent momentum stocks led the Nasdaq, with Amazon.com (AMZN.O) and Apple (AAPL.O) providing much of the heavy lifting. Both stocks rose after posting robust quarterly results, but the gains weren’t enough to offset losses in the financial and energy sectors, which had been leading the market earlier in the day.
The S&P 500 and the Dow Jones Industrial Average were lower as investors worried about the effect of rising interest rates on corporate profits. Investors also noted that the Commerce Department’s Personal Consumption Expenditures report showed inflation cooling to a near-term target of the Federal Reserve’s 2% annual inflation goal. The data fueled expectations that the Fed could raise short-term interest rates when it meets next month.
Several banks also fell, weighed down by concerns that higher rates hurt consumer spending. Regional bank Regions Financial (RF.N) fell 12.4%, while JPMorgan Chase (JPM.N) and Citigroup (C.N) lost 1.7% each. Among the other big losers, shares of Moderna (MRNA) dropped 5% after Morgan Stanley started coverage with an “overweight” rating on the biotechnology company.
Investors also retreated from technology and a mix of consumer-focused companies as worries about higher interest rates took a toll on their prospects. Shares of Choice Hotels International (CHH.O) plunged nearly 6% after the hotel chain offered to buy rival Wyndham Hotels for $90 a share, which was 7% below its previous closing price.
Among individual stocks, Nike (NKE) gained nearly 7% after reporting better-than-expected profit and cutting its inventory. VF Corp (VFC) advanced more than 5% after activist investor Engaged Capital increased its stake in the apparel company. Pfizer (PFE.N) slipped almost 6% after the pharmaceutical giant cut its full-year forecasts and reported weaker demand for Covid-19 products. Advancing issues outnumbered decliners by a 2.63-to-1 ratio on the NYSE, while on the Nasdaq, a 3.28-to-1 ratio favored advancers. Despite the losses, all three major indexes climbed this week. They fell sharply earlier in the week amid fears that a government shutdown was imminent. Still, they rebounded on Thursday as lawmakers passed a temporary measure to fund the government for another three weeks.
