Sept 30 (Reuters) – The Nasdaq rose on Friday as growth stocks rose on lower Treasury yields, although resilient core inflation added to fears of sharp interest rate hikes that would hamper the growth of consumer spending.
Rate-sensitive stocks including Tesla Inc (TSLA.O), Meta Platforms (META.O), Alphabet Inc and Microsoft Corp edged higher between 0.1% and 1.7%, following a decline in the benchmark yield of the 10-year Treasury at 1-week low of 3.682%.
Data showed the price index for core personal consumption expenditures jumped 0.6% after remaining unchanged in July. It climbed 4.9% year-on-year in August after rising 4.7% in July. Read more
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“What we need to see is a decline in inflation on a sequential basis and we’re just not seeing it yet,” said Art Hogan, chief market strategist at B. Riley Wealth.
“It’s not going to change that hawkish scenario that’s driven stocks down and why we’re getting the kind of reaction we’re seeing now.”
Fed funds futures showed traders saw a nearly 68% chance the US central bank would hike rates by 75 basis points at its November meeting, up from 61% before the inflation data .
The Federal Reserve’s aggressive stance on interest rate hikes pushed all three major indexes into a bear market and brought them to their third straight quarterly decline.
The Dow Jones Industrial Average (.DJI) was set for its worst month since pandemic lows. The S&P 500 (.SPX) has fallen 8.2% so far in September, testing its lowest level since November 2020, while the Nasdaq (.IXIC) has lost more than 9% in the month.
“It’s also the end of the quarter and the market will potentially be impacted, whether it’s rebalancing or another type of activity like bonds versus stocks,” said Doug Fincher, manager. portfolio manager at Ionic Capital Management.
Of the 11 major sector indices in the S&P 500, consumer discretionary stocks (.SPLRCD) were the hardest hit, with Nike Inc (NKE.N) falling 10.64%.
The company warned of tighter margins, fueling fears of lower industry-wide profits due to an inflation-induced impact on consumer sentiment. read more read more
Shares of Under Armor (UAA.N) fell 6.5%, while footwear retailer Foot Locker Inc (FL.N) fell 3.9%.
Carnival Corp’s (CCL.N) quarterly earnings below expectations sent its shares tumbling 18.6%, underscoring that soaring prices have forced consumers to cut back on discretionary spending such as cruises. Read more
Fed Vice Chairman Lael Brainard and San Francisco Federal Reserve Chair Mary Daly backed tough measures to curb high inflation, with Brainard warning against premature rate cuts. Read more
As of 10:45 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 10.91 points, or 0.04%, at 29,236.52, the S&P 500 (.SPX) was up 13.86 points, or 0.38%, to 3,654.33 and the Nasdaq Composite (.IXIC) was up 86.30 points, or 0.80%, to 10,823.80.
Advancing issues outnumbered declining issues with a ratio of 2.60 to 1 on the NYSE and 2.86 to 1 on the Nasdaq.
The S&P index recorded no new 52-week highs and 49 new lows, while the Nasdaq recorded 10 new highs and 184 new lows.
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Reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru; Additional reporting by Bansari Mayur Kamdar; Editing by Arun Koyyur
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