The stock market was set to fall for a third day in a row on concerns that 2023 could bring a global recession and that central banks will continue to aggressively raise rates. Facebook parent Meta Platforms bucked the trend by gaining nearly 3% on an upgrade.
Indexes were near session lows in late trading. The Nasdaq composite was down 1.1% while the S&P 500 dropped 1.4% by late afternoon. The Dow Jones Industrial Average fell 1.6%. The small-cap Russell 2000 index dropped 1.3%.
Volume fell on the Nasdaq but rose on the NYSE vs. the same time on Thursday. Friday is the quarterly stock market event with options and futures expiring, commonly referred to as "quadruple witching." Market volume tends to be higher during those days.
On Friday, the S&P 500 followed the Nasdaq in falling below the 50-day moving average. The S&P is now at its lowest level since Nov. 9.
The yield on the benchmark 10-year Treasury note rose 3 basis points to 3.48%. Crude oil prices fell 2.7% to $74.04 per barrel.
The Innovator IBD 50 ETF fell 1.5%, led lower by biotech Catalyst Pharmaceuticals. It dropped more than 6% to below its cup-with-handle buy point of 16.76.
All 11 S&P sectors are down Friday, led lower by the S&P Real Estate Select Sector ETF, which was down 3.2% in late afternoon trading.
"Market volume increases during major expiration days, and that can usually move a nervous market in one direction or another," said Quincy Krosby, chief global strategist for LPL Financial. "Market participants continue to wonder if the Santa Claus rally ... is really going to take place. That the Senate passed a one-week funding bill to keep the government open until next Friday could also be the kind of net positive event that brings cheer to the market."
Next week marks the start of Santa Rally seasonality for the stock market, peaking between Christmas and the first two trading days of 2023.
Stock Market Falls On Weak Business Activity
The flash composite Purchasing Manager's Index (PMI) dropped sharply to 44.6, below November's 46.4 number and well below Econoday's consensus forecast of 46.7. The flash PMI combines both manufacturing and services into one index.
Adding to investors' concerns about rate hikes and a global recession, the European Central Bank said Friday it would continue to raise rates in half-percentage-point increments next year. The Bank of England was the only major central bank this week to signal caution about raising rates much higher, saying it believed the U.K. economy was already in a recession.
Meta Platforms rallied 2.8% after JPMorgan analyst Doug Anmuth raised the social media giant to an overweight rating and raised the price target to 150.
The analyst took an upbeat view after a miserable year, noting that "heading into 2023, we believe some of these top and bottom-line pressures will ease, and most importantly, Meta is showing encouraging signs of increasing cost discipline."
Starbucks Stock Falls As Workers Begin 3-Day Strike
Tesla CEO Elon Musk banned high-profile and mostly liberal journalists from CNN, The New York Times and The Washington Post for publishing real-time coordinates of his airplane movements. TSLA stock sold off Friday, dropping more than 4% to the lowest in more than two years.
Starbucks shares gave up 1.8% as the stock has fallen three days out of five this week, but remains above the 50-day moving average. SBUX stock is fading back toward a buy zone from a bottoming base cleared Nov. 9. The buy point was 93.58.
A thousand Starbucks workers at 100 U.S. stores nationwide are starting a three-day strike, as a unionization tide continues to hit corporate America. In a tweet Friday, the Starbucks Workers United described the three-day strike as the longest yet in its yearlong unionization campaign. Starbucks says it's been negotiating in good faith.
Stock Market Movers And Shakers
Nasdaq 100 component Adobe rallied 3.2% after beating fiscal Q4 2022 earnings estimates. The desktop software maker gave bullish guidance for the first quarter of 2023.
Accenture on Friday reported fiscal first-quarter earnings and revenue that topped Wall Street targets. However, shares fell more than 5% after revenue guidance came in below expectations. Currency exchange rates impacted the company's outlook.
Exact Sciences rocketed 18% after rival Guardant Health disclosed results in a three-year trial of its blood-based test for colorectal cancer. Guardant's results lagged those of rival Exact Sciences. GH plunged 27% on the news.
U.S. Steel rose 5% after raising Q4 EPS guidance above estimates. The stock is testing its 200-day line, which has been horizontal for months.
Follow Michael Molinski on Twitter @IMmolinski
