Wall Street dips, stocks head for worst week since December

Stocks have been struggling since rallying at the start of the year

By AP, Reuters

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Traders work the floor of the New York Stock Exchange (NYSE) during morning trading on Friday. The stock market opened low this morning continuing a week of losses by Dow Jones, Nasdaq and the S & P 500 which is heading to its worst week in almost two months.  - AFP
Traders work the floor of the New York Stock Exchange (NYSE) during morning trading on Friday. The stock market opened low this morning continuing a week of losses by Dow Jones, Nasdaq and the S & P 500 which is heading to its worst week in almost two months. - AFP

Published: Fri 10 Feb 2023, 7:38 PM

Wall Street is drifting lower on Friday as stocks head toward the close of their worst week since December.

The S&P 500 was little changed in morning trading and on pace for a 1.3 per cent loss for the week. The Dow Jones Industrial Average was up 41 points, or 0.1 per cent, at 33,747, as of 10:09 a.m. Eastern time, while the Nasdaq composite was 0.6 per cent lower.


European stocks fell on Friday as investors fretted about the impact of interest rate hikes on growth, while the yen benefited from reports that academic Kazuo Ueda was set to be appointed Japan’s next central bank governor.

The MSCI World Equity Index was down 0.5 per cent on the day at 1258 GMT, on track for its worst week since mid-December.


Stocks have been struggling since rallying at the start of the year on hopes that the economy could avoid a severe recession and that cooling inflation could get the Federal Reserve to take it easier on interest rates. Since late last week, worries have risen that a still-strong jobs market could up the pressure on inflation and keep the Fed on track to leave rates at the higher-for-longer level that it’s been talking about.

Higher rates can drive down inflation but they also raise the risk of a recession and drag down investment prices. And central banks around the world are intent on raising rates, even if at a slower pace than before.

“For most central banks the risk is that they have tightened too little, not too much,” economists led by Ethan Harris wrote in a BofA Global Research report.

“The ultimate gauge of success here is not avoiding a recession, but getting inflation on a path back to target,” Harris wrote.

The worries about rates mean much of Wall Street’s action has been in the bond market, where yields have climbed on expectations for a firmer Fed.

The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, rose to 3.70 per cent from 3.66 per cent late Thursday. The two-year yield, which moves more on expectations for the Fed, ticked up to 4.50 per cent from 4.48 per cent. It was at 4.08 per cent just over a week ago and is near its highest level since November.

One area the Fed has focused on keeping under control is expectations for inflation among U.S. households. If those took off, the fear is that it could create a self-reinforcing cycle that only worsens inflation.

A preliminary report on Friday showed that expectations for year-ahead inflation rose to 4.2 per cent from from 3.9 per cent in January, according to the University of Michigan. But that’s also down from 4.4 per cent in December.

Companies have also in recent weeks been delivering a mixed set of earnings reports for the end of 2022. Lyft tumbled 35 per cent following its latest report. The ride-hailing company gave a forecast for revenue in the first three months of 2023 that fell short of analysts’ expectations.

Newell Brands, whose brands include Sharpie markers and Calphalon cookware, fell 6.3 per cent despite reporting stronger revenue and profit for the latest quarter than analysts expected. Forecasts for revenue and earnings this upcoming year were below analysts’ forecasts.

Given worries about still-high inflation and a slowing economy eating into corporate profits, analysts have been cutting their forecasts for upcoming earnings for companies. So far this year, analysts have cut their expectations for S&P 500 companies’ first-quarter earnings by 4.5 per cent, according to strategists at Credit Suisse. That’s a deeper cut than average.

Expedia lost 6.9 per cent after reporting weaker profit and revenue for the latest quarter than expected.

Oil prices rose after Russia announced Friday that it will cut oil production by 500,000 barrels per day next month. Western countries had capped the price of Russia’s crude over its invasion of Ukraine. Brent crude, the international standard, rose 1.5 per cent to $85.79 per barrel.

Benchmark U.S. crude added 1.6 per cent to $79.27 per barrel.


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