Stocks were mixed in volatile trading Friday as investors assessed the potential impact of policy shifts by the world’s largest central banks on inflation and growth.
The S&P 500 fell 0.5%. The Dow Jones Industrial Average weakened 1%, or about 367 points, after being down more than 600 points in morning trading. The Nasdaq Composite Index pared earlier losses and then turned positive, recently rising about 0.2%.
Markets have been dragged down toward the end of the week by concerns about the possibility of higher interest rates in the future. Shortly after the Federal Reserve announced Wednesday its plan to speed up the tapering of its pandemic-era stimulus measures and possibly raise interest-rate increases next year, equities had rallied.
“People are scratching their heads and wondering ‘Wow, was the post-Fed meeting reality just a complete head fake?’,” said
Jordan Kahn,
chief investment officer of ACM Funds.
Changes to global central banks’ monetary policy have also grabbed investors attention in assessing the outlook for 2022. But concerns have turned to the effect on economic growth, while fast-growing tech names have been pressured by the prospect of higher interest rates. Investors have turned their attention to how higher interest rates will impact value stocks, which tend to historically perform better when rates go higher.
“Friday is a choppy period, and it represents really just the indecision that we’re in right now,” said David Keller, chief market strategist at StockCharts.com. “It’s been a rotation year, rotational week and now we have a rotational day.”
The Fed’s moves didn’t entirely dispel investors’ concerns about inflation, said
David Donabedian,
chief investment officer at CIBC Private Wealth. The central bank may need to signal an even faster pace to rate increases early next year if data suggest inflation is still quickening, he said.
“The underlying, primary fear in the market is inflation,” he said. “What the Fed did is the old saying: To solve a problem, you have to first acknowledge there is one. It’s a wise move but just a temporary respite for the markets’ concerns over inflation.”
In individual stocks,
soared 13% after The Wall Street Journal reported that Oracle is in talks to buy the electronic-medical-records company.
fell 6%.
rose 5.4% after reporting a jump in revenue due to higher shipping rates that helped ease rising costs tied to a labor shortage.
Electric vehicle startup
is on pace to end at the lowest level since its initial public offering a month ago after the company reported financial results Thursday. Shares declined 9.5% to $98.51.
On Thursday, the Bank of England raised interest rates, taking investors and analysts by surprise. The European Central Bank said it would phase out an emergency bond-buying program, while ramping up other stimulus measures. The pan-continental Stoxx Europe 600 index fell 0.35% Friday.
The
said Friday it would wind down its holdings of commercial paper and corporate bonds, but kept monetary policy ultraloose overall. The benchmark Nikkei 225 index fell 1.8%. Other Asian indexes were mostly lower, with Hong Kong’s Hang Seng down 1.2% and the Shanghai Composite Index 1.2% lower.
Investors are watching the spread of Covid-19 cases and the virus’s latest variant. Omicron has prompted fresh restrictions in Europe ahead of the holidays, but for now, investors are betting that higher vaccination rates will mean governments hold back from significantly tougher measures.
“You have to put that down as a risk, but it is also pretty clear that the political reaction is still very unlikely to lead to major impediments to the economy,” said Mr. Donabedian. “We don’t think that’s going to be a major force in knocking the economy or the market off its course.”
Bitcoin and other cryptocurrencies, including ether and Solana, fell. Bitcoin recently traded at around $46,991, according to CoinDesk, down about 2.4% from its level at 5 p.m. ET Thursday.
In commodity markets, Brent crude, the international oil benchmark, fell 2.3% to $73.30 a barrel. Gold prices gained 0.4% to $1803.80 a troy ounce. The yield on the benchmark 10-year U.S. Treasury note fell to 1.409% Friday from 1.422% Thursday.
Write to Will Horner at william.horner@wsj.com and Hardika Singh at hardika.singh@wsj.com
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