Michael M Santiago
US markets showed mixed results on Friday, as losses in large-cap technology companies were offset by gains in energy stocks. For the week, all three of Wall Street’s major indexes were on track to end lower amid concerns that the Federal Reserve need to maintain the tighter monetary policy for longer.
At noon, the high-tech Nasdaq Composite (COMP.IND) was down 1.07% at 11,663.70 points, with FAANG shares pulling back across the board.
The benchmark S&P 500 (SP500) index was lower by 0.23% to 4,072.27 points, while the blue-chip Dow (DJI) was up to 0.19% to 33,763.98 points.
Of the S&P’s 11 sectors, five were trading in the green, led by Energy. Consumer Discretionary and Technology were the main losers.
Treasury returns were mixed. The 10-year Treasury yield (US10Y) rose 5 basis points to 3.73%, while the 2-year yield (US2Y) fell 1 basis point to 4.50%.
This week the heady rally of 2023 has lost some steam, with the initial catalyst for the loss of momentum in the form of last Friday’s explosive jobs report. Although Fed chief Jerome Powell calmed markets on Tuesday by not appearing too hawkish in response to the jobs report, subsequent comments from a number of central bank speakers indicated more rate hikes may be on the way.
“Although the S&P 500 is still above where it was before the FOMC last Wednesday, it looks like more challenging markets have developed for both risk and rates since the payrolls number two days later,” said Jim Reid of Deutsche Bank.
In the trading session on Thursday, sentiment was clouded by worrying signals from the Treasury market in the form of a yield curve inversion that fell to its widest point since 1981.
“After Wednesday’s strong 10-year auction, a weak 30-year auction last night pushed yields higher on the curve in the closing hours of the session,” Reid explained.
“The only silver lining to the poor 30-year auction was that it prevented the 2s10 curve from closing at its most inverted point for 42 years… Regardless of the short respite, these curve levels are very extreme and at levels where that a recession has always existed”. followed up in a few months,” Reid added.
Turning to Friday’s economic calendar, the University of Michigan released its preliminary measure of consumer sentiment for February. The data came in at 66.4 versus the expected figure of 65.
Among active stocks, Lyft (LYFT) tumbled due to weak guidance.
