Stocks finished sharply lower on Friday as investors closed out the worst month for the S&P 500 since 2008.
The Nasdaq saw fresh 2022 lows as extended declines for both Tesla (TSLA) and Apple (AAPL) pulled the tech benchmark sharply lower amid what appeared to be end-of quarter repositioning my major investment funds.
The S&P 500, meanwhile, is down 9.02% for the month after hitting a November 2020 low by the close of trading on Thursday. The S&P has seen a quarterly decline of nearly 5% and a YTD drop of 24.50%.
Benchmark 2-year notes were pegged at 4.262% in late day New York dealing, pulled lower by a softer U.S. dollar, while 10-year notes were up 0.08 to 3.827%.
There were solid gains for the pound, which had its best day on foreign exchange markets in more than two years as the Bank of England continues to intervene in government bond markets.
Inflation prospects, as well as planned central bank rate hikes, remain the market's central concern, however, underscored by a faster-than-expected September reading for consumer prices in Europe, which rose to a record high of 10%, and jobs data from the U.S. yesterday showing weekly unemployment claims fell to the lowest levels in five months.
The Federal Reserve's preferred measure of U.S. inflation sped higher in August, erasing investor hopes that the central bank will back away from its plans for further, and possibly deeper, near-term rate hikes.
The August core PCE Price Index rose 4.9% from last year, and 0.6% on the month, the Bureau of Economic Analysis reported, with both figures coming in firmly ahead of Wall Street forecasts.
"The higher-than-expected inflation readings will continue to put pressure on the Fed to keep raising rates, which in turn, will continue to pressure the stock market," said Chris Zaccarelli, chief investment officer with Independent Advisor Alliance. "Bear market rallies can happen at any time – remember that the S&P rallied 17% from mid-June to mid-August, but we don’t think this bear market will be over until the Fed stops hiking rates and even then, it could take some time before a new bull market begins."
Vice Chair Lael Brainard was among the Fed officials who made public remarks Friday following the data release, after comments yesterday from Cleveland Fed President Loretta Mester that suggested a bias towards even more near-term rate hikes.
"Monetary policy will need to be restrictive for some time to provide confidence that inflation is moving down to target," Brainard said in prepared remarks. "The economic environment is highly uncertain, and the path of policy will be data dependent. While the precise course of action will depend on the evolution of the outlook, I am confident we will achieve a return to 2 percent inflation."
European stocks were higher on the session, rising 0.68% in mid-day Frankfurt trading, although the benchmark is on pace for its third consecutive quarterly decline, with a 0.37% gain for the FTSE 100 in London.
On Wall Street, the S&P 500 ended down 1.51%, while the Dow Jones Industrial Average lost 500 points, or 1.71%, to 28,725. The tech-focused Nasdaq slipped 1.51%.
The S&P 500 is off 2.9% for the week, while the Dow is down 2.9% and the Nasdaq is off 2.7%.
Nike (NKE) shares dropped 12.81% after warning that "higher markdowns" will be needed to reduce its bloated global inventory, pressuring profit margins for the world's biggest sports apparel company.
Micron Technology (MU) edged up 0.18% after a move by the Japanese government to subsidize its chipmaking operations in Hiroshima offset a muted near-term profit outlook.
Boeing (BA) shares slipped 3.31% following multiple reports that suggest the planemaker may not meet an end-of-year target for recertification of the 737 MAX.
