4.05pm: Nasdaq sees first weekly loss in a month
US stocks finished the trading session mixed as investor braced for tighter monetary policy from the Federal Reserve.
At the close, the Dow rose 138 points to 34,721, while the S&P 500 eased 12 points at 4,488 and the tech-heavy Nasdaq slipped 186 points to 13,711.
Notable movers included shares of Robinhood Markets Inc (NASDAQ:HOOD), which fell more than 6% after Goldman Sachs downgraded the trading app to ‘Sell’ from ‘Neutral’.
12:30pm: Investors contemplate the next policy moves by the Fed; Wall Street mixed at the midday point
Stocks were mixed at the midday point on Friday after noises from the Fed offered a mixed set of commentary on the policy path forward for the central bank.
Remarks from earlier this week suggested other members of the central bank were also warming to the idea of tightening policy.
On Wall Street, the S&P 500 and the Dow were both in positive territory, with the Dow up 0.8% at 34,861 points and the S&P seeing gains of 0.3% at 4,512. The Nasdaq was lagging, down 0.4% at 13,845 points.
Meanwhile, the dollar index touches new two-year peak, said Chris Beauchamp at IG.
“It’s all go for the greenback once again. After some hesitation in March the dollar appears to have rediscovered its forward momentum," Beauchamp said "Further Fed tightening seems to be the only sure thing around at the moment, and with CPI next week likely to deliver another surge in prices there is plenty of rationale to stick with long dollar trades it seems.”
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9.42am: US stocks start in the red
US shares started lower in New York on Friday as traders continue to be uneasy amid the Fed's tightening stance.
The Dow Jones Industrial Average shed around 17 points at 24,566, while the S&P 500 lost around 12 points to stand at 4,488.
The tech laden Nasdaq Composite Index plunged around 105 points at 13,792.
The US market is heading for a lower week overall. One governor from the central bank said earlier in the week that the Fed could start reducing its balance sheet at a 'rapid pace' as soon as May this year.
The sudden, if not entirely unexpected, change of tone from the Fed due to the current global inflationary environment, has caused rates to shoot higher.
The US 10-year Treasury yield hit a new three-year high overnight, rising above 2.69%. The rate ended last week at 2.38% and started the year at 1.63%.
6:30am - Firmer start predicted for Wall Street
US stocks are poised to open higher on Friday, in a quiet end to the week, with markets having already factored in a slew of interest rate increases in the world’s biggest economy.
The hawkish tone struck by the Federal Open Market Committee (FOMC) has signposted the path for higher interest rates in the world’s biggest economy and markets have had time to digest the news.
Futures for the Dow Jones Industrial Average were up 0.3% in pre-market trading, while those for the S&P 500 were up 0.2% and contracts for the tech-heavy Nasdaq-100 rose 0.1%.
“The data calendar across Europe and the US is decidedly second-tier and quiet. It wouldn’t surprise me if the conditions we are seeing in Asia today continue through to the New York close. If oil keeps falling, equities should finish the week on a positive note, temporarily at least,” said Jeffrey Halley, Senior Market Analyst, Asia Pacific, at OANDA.
In March, the rate-setting body raised interest for the first time since 2018. The minutes of that meeting, released earlier this week, showed that most officials had agreed that “one or more 50 basis-point increases in the target (interest rate) range could be appropriate at future meetings, particularly if inflation measures remained elevated or intensified".
“St Louis Federal Reserve President Bullard was the latest Fed talking head to come out with a series of hawkish statements on future monetary policy. The fact that equities recovered intraday losses suggests that the 225 basis points of Fed Funds hikes futures markets have now priced in could be enough for now. It is the Fed’s battle to lose, not win,” added Halley.
The FOMC also said it will soon scale back its $9 trillion balance sheet, sending out a clear signal to markets.
“I believe the real stress point will be the Federal Reserve’s quantitative tightening, slated for a May start, and the appetite from the market to absorb the sales,” said Halley.
Benchmark Brent crude futures were up 0.7% at $101.31 while WTI futures were up 0.9% at $96.92.
While oil futures were higher, prices have eased over recent weeks after reaching around $130 a barrel when Russia invaded Ukraine late February. Some of the deepest concerns about runaway inflation have been allayed but investors will continue to watch developments on the war front in Ukraine.
Contact the author at stephen.gunnion@proactiveinvestors.com