4:12pm: Nike shares swoon on overstocked supply
The Dow closed Friday down 500 points, 1.7%, at 28,726, the Nasdaq Composite lost 162 points, 1.5%, to 10,576 and the S&P 500 dropped 55 points, 1.5%, to 3,586.
The session dropped the S&P 500 to its lowest close of 2022, and the Nasdaq clinched its worst month since April.
Among the laggards was Nike Inc, shares of which tumbled nearly 13% after the athletics retailer reported overstocked inventory issues. It was the stock's worst day since 2001.
12.05 pm: Nasdaq has dropped about 9% in September
US stocks were little changed in noon trading following yesterday’s selloff that saw the S&P 500 hit lows not seen since 2020.
At midday, the Dow slipped 97 points to 29,129, while the S&P 500 added a single point at 3,641 and the tech-heavy Nasdaq rose 32 points to 10,769.
“The market stinks, but that’s basically what the Fed wants: tighten financial conditions, and they believe that that will help bring down inflation to the levels that they find acceptable,” Harris Financial Group managing partner Jamie Cox said.
“And they’re using the transmission mechanism of the market to make that happen,” Cox added.
Notable movers included shares of NIKE, Inc, which skidded more than 11% lower after the athletic footwear and apparel maker released its first-quarter financial results that showed a 44% increase in its inventory.
9.35am: Fed’s preferred inflation measure comes in hot
After rising in pre-market trading, US stocks reversed at the open on Friday with the release of this month’s personal consumption expenditures (PCE) data which showed inflation remains red hot.
The Fed's preferred inflation reading, the PCE price index, increased 0.3% month-over-month in August, up 6.2% from the same month one year ago. Consumer spending, however, lifted during August by 0.4% to $67.5 billion.
Just after the open, the Dow Jones Industrial Average had dipped 108 points or 0.4% at 29,117 points, the S&P 500 was down 9 points or 0.2% at 3,632 points, and the Nasdaq Composite had slipped 21 points or 0.2% at 10,718 points.
After reporting revenue that topped expectations despite a dent in its gross margins after the bell on Thursday, Nike Inc shares had plunged about 13% at the open.
6.30am: Cautious rebound?
US stocks are expected to open higher on Friday in a cautious rebound from the selling frenzy yesterday, which sent the S&P 500 to a new low for the year.
Concerns over the gloomy prospects for the world’s biggest economy amid rising interest rates and stubbornly elevated levels of inflation have not dissipated, however, and trading is expected to be volatile.
Futures for the Dow Jones Industrial Average were up 0.8% in pre-market trading, while those for the S&P 500 rose 0.9%, and contracts for the Nasdaq-100 were 0.9% higher.
“Due today, investors will focus on the US income, spending, but more importantly the PCE data. The world is praying for a sufficiently soft PCE to cool down the selling pressure on bonds and equities,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The PCE deflator data, due at 8.30am ET today, is the Federal Reserve’s favorite measure of inflation.
Ozkardeskaya noted that the falls on the S&P 500 and Nasdaq wiped out recent gains. “Nothing is left from the summer rally in the US stocks,” she said.
Given the unrelentingly hawkish tone struck by US rate setters, interest rates in the world’s biggest economy look set to continue rising aggressively despite the threat to economic activity.
Cleveland Fed head Loretta Mester joined her colleagues in the idea of further tightening yesterday while a couple of other Federal Open Market Committee members, including Lael Brainard and John Williams are due to speak today. Stocks are likely to come under pressures if they too adopt a hawkish tone.
Investors fear that the Federal Reserve’s aggressive interest rate hikes will push the economy into a prolonged recession.
Fluctuations in the currency and bond markets are also expected to be a factor in today's stock market activity. The yield on the 10-year US Treasury is rising again, having pulled back from levels above 4% earlier this week.
Contact the author at jon.hopkins@proactiveinvestors.com