The US stock market experienced a sell-off on Friday as renewed fears of a US Federal Reserve rate hike in response to rising inflation sent Wall Street indices lower. The Nasdaq index fell approximately 0.68% on Friday, marking a weekly decline of 2.34%. This is the first time in 2023 that Nasdaq has ended lower for two consecutive weeks. The S&P 500 index dropped 0.11% on Friday and saw a weekly loss of 0.61%. However, the Dow Jones index managed to end the day 0.30% higher and closed the week with a 0.44% gain.
Among the top losers on Friday were Disney, Boeing, Dow Inc, Nike, and Microsoft. Disney shares plummeted 2.98% to close at $89.02 per share, while Boeing shares nosedived 1.07% to $235.72. Nike shares corrected 0.86% to end at $108.09, and Microsoft shares dipped 0.59% to close at $321.01.
The slide in the US stock market can be attributed to a reassessment of inflation, according to Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute. He suggested that investors were taking a closer look at the inflation data and realized that disinflation had been rapidly declining but may be stabilizing.
Data released on Friday showed that the US producer price index (PPI) for final demand rose 0.3% in July, surpassing economists’ expectations of 0.2%. The PPI also increased by 0.8% in the 12 months through July. However, the June data was revised to show no change in the PPI instead of the previously reported 0.1% increase.
This data suggests that the Federal Reserve may need to keep interest rates higher for a longer period of time and could potentially raise rates further this year. Although some investors took profits in response to the news, others with available funds saw an opportunity to buy the dip.
Please note that the views and recommendations mentioned in this article are those of individual analysts or broking companies and not of Mint. We advise investors to consult certified experts before making any investment decisions.
Analyst comment
Negative news. The sell-off in the US stock market was driven by renewed fears of a Federal Reserve rate hike due to rising inflation. The Nasdaq and S&P 500 indices experienced declines, while the Dow Jones index saw a slight gain. Top losers included Disney, Boeing, Dow Inc, Nike, and Microsoft. The market is likely to remain volatile as investors reassess inflation data and the possibility of further rate hikes.
