4:15pm: Rally fades
US stocks finished Friday’s trading session on the back foot as the election-inspired rally lost steam.
The Nasdaq led the losses, down 2.2% at 18,680 points. The S&P 500 was down 1.3% at 5,870 points and the Dow Jones was down 0.7% at 43,444 points.
3:00pm: Standout movers
Some movers, largely to the downside.
Palantir Technologies Inc (NYSE:PLTR) added 9% after it announced it is transferring its listing to the Nasdaq from the New York Stock Exchange.
Alibaba Group (NYSE:BABA)'s US-listed shares were down 3% after the Chinese eCommerce giant posted mixed third quarter results.
And bluebird bio Inc shares shed more than 11% on Friday after the Massachusetts-based biotech company developing gene therapies for severe genetic diseases was downgraded by Bank of America analysts.
1:50pm: Risky forecasts
Major indices continued to fall by Friday afternoon, with the Nasdaq shedding 2.6%.
The US economy entered the elections supported by structural and cyclical strengths, with productivity gains boosting potential growth above 2% and a resilient consumer base, analysts at Bank of America noted. Despite a cooling labor market, risks to Fed policy leaned toward a higher terminal rate.
The Republican election victory is expected to bring significant policy changes, with tariffs and immigration restrictions counterbalancing fiscal easing and deregulation. GDP growth is projected at 2.3% in 2025 and 2.0% in 2026, while inflation may remain above 2.5%. The Fed is forecasted to hold rates at 3.75-4.0% after responding to tariff impacts.
"Given the uncertainty about which aspects of the Trump policy agenda will be prioritized, the risks around our forecasts are unusually large," analysts wrote.
"There are plausible scenarios in which growth could run above 3%, or the economy could enter a recession. Our base case is sanguine, but our conviction is low. As the policy agenda becomes clearer next year, we will be nimble in adjusting our forecasts as needed."
11:45am: Stocks retreat
The three major stock indexes were firmly in the red following hawkish commentary from Fed chair Jerome Powell.
The tech-laden Nasdaq fell 2.1% to 18,713 points, the S&P 500 was down 1.2% at 5,872 points and the Dow Jones shed 0.8% at 43,411 points.
“A week of indecision for stock markets is ending on a weaker note following Jerome Powell’s unexpected dialling back of dovish rhetoric,” IG chief market analyst Chris Beauchamp commented.
“Nvidia, at risk of weakness due to its earnings next week, has dropped over 2% and looks primed for more profit-taking into next week.”
Amid weakness in tech stocks, Tesla had added 3.6%.
“Tesla continues to rise as its founder’s ascension to the corridors of power becomes ever more impressive, but other tech stocks have taken Powell’s speech in a gloomier fashion,” Beauchamp said.
9.45am: Wall Street drops as retail sales surpass expectations
Wall Street faced a tough start as trading got underway on Friday on the back of a jump in retail sales over the course of October.
The Nasdaq dropped 1% after the bell, while the S&P 500 fell by 0.7% and Dow Jones slipped 0.3%.
Figures from the Commerce Department showed retail sales across the US ticked up by 0.4% last month, beating expectations for 0.3% and against an upwardly revised 0.8% in September.
Though signalling strength within the US economy and willingness to spend among consumers, analysts had pointed to potential inflationary pressures.
“Optimism about the economic outlook among consumers might have increased since the election,” Pantheon Macro analysts said, “driven by expectations of tax cuts and surging stock prices”.
Federal Reserve chair Jerome Powell on Thursday had pointed to strength within the US economy, suggesting further interest rate reductions could be made more slowly.
7.18am: Wall Street to extend declines as rate cut hopes dialled back
Wall Street looked on course to fall further ahead of the weekend as futures pointed to a negative start against a backdrop of reduced rate cut expectations.
Futures had the Nasdaq down 0.8% ahead of Friday’s opening bell, while the S&P 500 and Dow Jones were seen 0.5% and 0.4% lower respectively.
Federal Reserve chair Jerome Powell on Thursday signalled there was no rush among policymakers to cut interest further after November’s reduction.
He dubbed the US economy’s recent performance as “remarkably good,” prompting market expectations for another 25 basis point cut in December to fall from 80% to 60%.
Retail sales figures are set to provide further clarity around the state of the economy later on Friday, with a 0.3% uptick expected for October against September’s 0.4% growth.
“Markets might not see a boost in retail sales as a good thing,” Tickmill Group partner Patrick Munnelly commented, however.
“Producer prices carry an upside risk to the personal consumption expenditures price Index, the Federal Reserve's preferred inflation indicator,” he added.