Stocks on Wall Street fluctuated on Friday, positioning the market for its first weekly loss in a month. The S&P 500 index remained largely unchanged in late afternoon trading, having dipped as much as 1.3% earlier in the day. Meanwhile, the Dow Jones Industrial Average saw a slight increase of 31 points, or 0.1%, recovering from earlier declines. The Nasdaq composite, however, fell by 0.4% as of 15:04 Eastern time, primarily impacted by weakness in the technology sector.
Multiple high-profile technology stocks contributed significantly to the market’s downturn. Notably, Apple experienced a 1% decline, while Broadcom dropped by 2.8%. Despite more companies within the S&P 500 reporting gains than losses, the overall performance was hindered by these significant drops.
Market participants are closely monitoring the latest quarterly results from U.S. companies, with over 90% of S&P 500 firms having reported earnings for the last quarter. Companies have largely exceeded Wall Street’s growth expectations, particularly within the technology sector, according to data from FactSet. However, some earnings reports revealed disappointing results, influencing market sentiment.
Payments company Block, which manages the Square and Cash App platforms, saw its shares tumble by 6.8% after reporting results below analysts’ expectations. Conversely, Peloton enjoyed a notable increase in its stock price, soaring by 11.8% after exceeding profit estimates. Expedia Group also experienced a substantial jump, rising 19.8% following a strong earnings report.
The scrutiny of corporate profits and forecasts has intensified as investors seek to determine whether the current high valuations in the market are justified. This examination has become more critical in light of a lack of comprehensive economic data due to the ongoing U.S. government shutdown, which has now reached historic lengths. The shutdown has delayed the release of key economic indicators, including employment data for both September and October.
The absence of employment statistics raises concerns as the job market is already showing signs of weakness. In a related report released on Friday, the University of Michigan indicated a sharp decline in consumer sentiment, falling to a three-year low. Economists had anticipated a slight increase in sentiment.
“Consumers are starting to get concerned about the potential effects of the government’s shutdown on economic activity,” noted Eugenio Aleman, chief economist at Raymond James, in a communication to investors. The survey also indicated a slight uptick in inflation expectations, compounding concerns over rising prices amidst a volatile trade environment.
The lack of timely inflation and employment data complicates decision-making for the Federal Reserve, which has indicated a cautious approach regarding future interest rate cuts. Wall Street’s substantial gains this year have been partly driven by speculation regarding potential interest rate reductions, which could stimulate economic growth by lowering borrowing costs. The Federal Reserve has already implemented two benchmark rate cuts this year in an effort to mitigate the impact of weakening employment on economic growth.
Despite the challenges, investors are still anticipating further interest rate cuts, with a current forecast suggesting a 66% probability of a reduction at the Fed’s meeting in December, according to CME FedWatch.
In the bond market, Treasury yields remained stable. The yield on the 10-year Treasury held at 4.09%, while the yield on the two-year Treasury slightly decreased to 3.55%.
Meanwhile, international markets reflected a similar trend, with European markets declining and Asian markets closing lower. In China, economic data revealed a 1.1% contraction in exports for October, with shipments to the United States plummeting by 25% compared to the previous year. Nonetheless, economists expect a rebound in Chinese exports following recent discussions between U.S. President Donald Trump and Chinese leader Xi Jinping aimed at easing trade tensions.
As Wall Street navigates these complex economic conditions, the focus remains on the interplay between corporate performance, government policy, and consumer sentiment, all of which will shape the market’s trajectory in the coming weeks.
