Wall Street closed sharply lower on Friday on continued apprehension that the Fed might re-embark on its policy of rate hikes. The Israel-Palestine conflict started weighing on the market. The U.S. 10-year treasury yield eased off from its very high level. All of the three major stock indexes ended sharply in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.9% or 286.89 points to close at 33,127.28. Twenty-five components of the 30-stock index ended in negative territory, while five ended in positive.
The tech-heavy Nasdaq Composite fell 202.37 points or 1.5% to close at 12,983.81.
The S&P 500 lost 53.84 points, or 1.3%, to close at 4,224.16. All 11 broad sectors of the benchmark index closed in the red. The Technology Select Sector SPDR (XLK), the Energy Select Sector SPDR (XLE) and the Consumer Discretionary Select Sector SPDR (XLY) slid 1.7%, 1.7% and 1.6%, respectively.
The fear-gauge CBOE Volatility Index (VIX) increased 1.5% to 21.71. A total of 11.1 billion shares were traded on Friday, higher than the last 20-session average of 10.6 billion. Decliners outnumbered advancers on the NYSE by a 2.63-to-1 ratio. On the Nasdaq, declining issues led advancers by 2.28-to-1.
Investors Worried That Fed Might Raise Rates Again
Over the last couple of weeks, the comfort investors felt about the Fed not raising rates in the near future has vanished. There’s a plethora of reasons behind this sentiment turn, led by comments coming from none other than the Fed chair himself late last week.
Inflation has remained high, albeit courtesy of high fuel prices, treasury yields have been scaling more than a decade and a half highs, and economic data has suggested that various sectors are showing resilience against the Fed’s policies. The benchmark U.S. 10-year treasury yield crossed the 5% mark for the first time since July 2007, briefly on Thursday. Even though it came down on Friday, it remains alarmingly high, stoking fears of a recession.
What has not helped at all is that on this topic of recession, the Fed continues to keep market participants guessing with regard to its policies. If indeed it goes for further rate hikes, the soft landing of the economy that it has been promising for over a year now might not be achievable.
The escalating conflict in Gaza has also not helped, and investors are taking money from the share market and rushing to the safety of the bond market. Even the financial sector is absorbing some heat, with mid-sized banks' earnings falling under expectations.
In an environment like this, growth stocks like technology and discretionaries usually take a hit because of their nature. Consequently, shares of Zscaler, Inc. ZS and Intel Corporation INTC fell 4.1% and 2.1%, respectively. Intel carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Weekly Roundup
All of the three widely followed indexes closed out last week with losses. The Dow Jones Industrial Average, the S&P 500 and the tech-heavy Nasdaq Composite slid 1.6%, 2.4% and 3.2%, respectively. The S&P 500 snapped two straight weeks of gains.
No economic data was released on Friday.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand-picked 7 your immediate attention.
See them now >>Intel Corporation (INTC) : Free Stock Analysis Report
Zscaler, Inc. (ZS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
