Highlights
Stocks slipped Friday on quarter-end flows with big technology shares mostly lower and bond yields higher. The Dow Jones industrial average eased 0.1 percent, the S&P 500 lost 0.4 percent and the Nasdaq fell 0.7 percent. The dollar rose and oil prices surged.
Equities were better bid early amid relief that inflation readings in the monthly personal income and spending report matched expectations but the good news was largely priced in. Quarter-end position adjustments weighed on the market later in the day along with higher bond yields.
In addition to the PCE price data, investors took note of weaker than expected personal consumption figures and weak guidance from Nike, the sporting goods business, the latest firm to suggest consumers are scaling back spending. Among Federal Reserve speakers, San Francisco Fed President Mary Daly said the latest PCE prices data suggested Fed policy is working but the inflation fight was not done yet.
Investors raised the odds of former President Trump returning to the White House after a shaky performance from President Biden in Thursday's presidential debate. The U.S. Treasury yield curve steepened in response as the market starts to price in a Trump administration which is expected to cut taxes and require more Treasury issuance. At the same time a Trump administration is seen as more inflationary as it would be expected to press for interest rate cuts and across the board trade tariffs to be paid by consumers.
Oil shares, health insurance and private prison shares got a lift on the view that a Trump administration would enhance their business prospects. Shares of renewable energy firms lagged.
Among sectors, laggards included apparel, paper & packaging, hospitals, food & beverage, solar power, and health & personal care. Best performers were energy, managed care, chipmakers, banks, credit cards, autos, media, and road & rail.
Equities were better bid early amid relief that inflation readings in the monthly personal income and spending report matched expectations but the good news was largely priced in. Quarter-end position adjustments weighed on the market later in the day along with higher bond yields.
In addition to the PCE price data, investors took note of weaker than expected personal consumption figures and weak guidance from Nike, the sporting goods business, the latest firm to suggest consumers are scaling back spending. Among Federal Reserve speakers, San Francisco Fed President Mary Daly said the latest PCE prices data suggested Fed policy is working but the inflation fight was not done yet.
Investors raised the odds of former President Trump returning to the White House after a shaky performance from President Biden in Thursday's presidential debate. The U.S. Treasury yield curve steepened in response as the market starts to price in a Trump administration which is expected to cut taxes and require more Treasury issuance. At the same time a Trump administration is seen as more inflationary as it would be expected to press for interest rate cuts and across the board trade tariffs to be paid by consumers.
Oil shares, health insurance and private prison shares got a lift on the view that a Trump administration would enhance their business prospects. Shares of renewable energy firms lagged.
Among sectors, laggards included apparel, paper & packaging, hospitals, food & beverage, solar power, and health & personal care. Best performers were energy, managed care, chipmakers, banks, credit cards, autos, media, and road & rail.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
