Wall Street has closed out its best week since March with a quiet finish on Friday, as stocks drifted to modest losses.
The S&P 500 fell 16.25 points, or 0.4 per cent , to 4,409.59 after wobbling through the day. It still closed out a fifth straight winning week for its longest such streak since November 2021, and it remains close to its highest level since April 2022.
The Dow Jones Industrial Average slipped 108.94, or 0.3 per cent , to 34,299.12, and the Nasdaq composite fell 93.25, or 0.7 per cent , to 13,689.57.
Humana dropped 3.9 per cent for one of the S&P 500’s sharpest losses after becoming the latest health insurer to warn about rising costs because of pent-up demand for medical services. Health insurance giant UnitedHealth issued a similar warning earlier in the week.
Treasury yields rose. The yield on the 10-year Treasury note increase to 3.76 per cent from 3.72 per cent late Thursday.
The yield on the two-year Treasury, which moves more on expectations for the Federal Reserve, rose to 4.72 per cent from 4.65 per cent .
The Fed held its benchmark interest rate steady at its meeting this week, but warned that it could raise rates twice more this year.
The central bank’s next meeting will run from July 25-26, and Wall Street is betting that it will raise rates. Traders are also mostly convinced that will be the last increase of the year, according to data from CME Group.
Before taking its pause this week, the Fed had raised interest rates at 10 straight meetings since March 2022. Its goal has been to slow the economy to cool inflation but not so much that it causes a recession.
“The idea that the Fed is pausing and taking time to see what the cumulative effect is on the economy from a policy standpoint, is the right move for them,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
The S&P 500 has risen nearly 15 per cent higher this year because of hopes that the Federal Reserve will end its hikes to interest rates soon as inflation cools and that the economy will avoid a severe recession.
Most of Wall Street’s gains have come from big tech stocks, the ones that would benefit most from easier rates.
The Fed’s latest meeting was preceded on Tuesday by a report showing that inflation continued cooling in May.
A closely watched survey on Friday suggested US consumers are also paring back their expectations for upcoming inflation.
That is key for the Federal Reserve, which does not want high expectations for inflation to kick off a vicious cycle that worsens it.
The preliminary reading from the University of Michigan’s survey also suggested consumer sentiment is strengthening more than expected.
Overall, investors contended with a mixed batch of economic updates this week.
Sales at US retailers unexpectedly strengthened in May. The resilient employment market showed some signs of weakening as slightly more workers applied for unemployment last week than expected.
The manufacturing industry, meanwhile, continued contracting under the impact of higher interest rates.
Press Association – AP