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Wall Street closed the week on Friday with marginal losses after market participants received better-than-expected inflation data in recent days. Attention now turns to the second decision of the year from the Federal Reserve's monetary policy committee next Wednesday.
Markets fell in today's session, pressured by technology stocks. An event known as “triple witches' day” was also celebrated on Friday.
The tech-heavy Nasdaq Composite (COMP: IND) fell 0.96% to finish at 15,973.17 points, dragged down by a post-earnings drop of ~14% in Adobe (ADBE). Analysts expressed concern about the creative software maker's ability to make money from artificial intelligence in the near term.
The S&P 500 Benchmark Index (SP500) fell 0.65% to settle at 5,116.95 points, while the frontline Dow (dji) fell 0.49% to conclude at 38,714.77 points.
Of the 11 S&P sectors, seven ended in the red and technology fell more than 1%. Energy led the winners.
For the week, the S&P fell 0.13%, the Dow Jones fell 0.02% and the Nasdaq fell 0.70%.
Friday marked a quarterly event in which options linked to stocks, exchange-traded funds and stock indexes expire simultaneously. Options tied to more than $5 trillion of such assets will expire today. The event is held four times a year: the third Friday of March, June, September and December. Historically, this day has seen choppy trading and large price swings.
As things stand, this week was turbulent for the markets. The S&P 500 (SP500) posted four negative days in five, but the only session it gained was a solid +1%.
That session was Tuesday, in which traders shrugged off a more positive-than-expected consumer price index report, thinking the data didn't do much in terms of changing the expected trajectory of U.S. interest rate cuts. Federal Reserve. However, the negative implications of a better-than-expected producer price index report and weaker retail sales data on Thursday were harder to ignore.
“The second half of March is each year dominated by the first quarter options expiration, a triple witch event, and the subsequent FOMC meeting. These events together can catalyze a market reversal, as was the case, among others, at the end of the first quarter of 2009 (from bear to bullish), the first quarter of 2020 (from bear to bullish) and the first quarter of 2022 (from bull to bear),” Alex King, head of Cestrian Capital Research, told Looking Alpha.
“However, until such a reversal occurs, it has not happened. We believe it is worth reacting, not anticipating. So for now we are watching prices closely, but we remain optimistic until proven otherwise,” he added King.
Treasury yields had spiked in the previous session as bonds had been sold off, following producer inflation and retail sales data. Returns were mixed on Friday. The yield on the 30-year bond (US30Y) was little changed at 4.44%, while the 10-year yield (US10Y) rose 1 basis point to 4.31%. The more rate-sensitive short-term 2-year yield (US2Y) rose 4 basis points to 4.73%.
See how Treasury yields have performed across the curve on the Seeking Alpha bond page.
Friday's economic calendar was quite busy. Before the opening bell, the Empire State reading on the manufacturing sector showed that business activity continued to decline in New York state. After that, the Federal Reserve's gauge of US industrial production rose unexpectedly in February. Finally, shortly after the opening bell, the University of Michigan Consumer Confidence Index fell slightly to 76.5 in March from 76.9 in February.
As for active stocks, Jabil (JBL) finished as the top percentage loser in the S&P 500 (SP500), after the manufacturing solutions provider missed quarterly revenue estimates.
