U.S. stocks turned lower Friday, following on from the best day for the Dow since early August, as a slump in domestic chipmaking stocks offset a boost from subdued Fed rate hike bets and early gains for domestic automakers facing unprecedented strike action.
A Reuters reporting suggesting Taiwan Semiconductor TSM, the world's biggest contract chipmaker, is looking to delay the delivery of some high-end gear clipped domestic semiconductor stocks, with Advanced Micro Devices AMD falling 2.8% and Applied Materials AMAT down 3.3% in early Friday trading.
The moves offset signals of slowing inflation from the University of Michigan's consumer sentiment index, as well as solid overnight data in China and suggestions that the world's major central banks have come to an end to their year-long cycle of rate hikes.
The European Central Bank lifted its benchmark deposit rate to 4% yesterday, the highest since the single currency was launched in 1999, but hinted that its likely to monitor the impact of tightening over the coming months on the world's biggest economic bloc as it pared growth and inflation forecasts.
That followed a move by the People's Bank of China to reduce the amount of cash banks must set aside to cover potential losses, effectively acting as a rate cut in the world's second-largest economy, as it looks to kick-start growth into the final months of the year.
Data late Thursday from Beijing also showed a solid rebound in August retail sales, which were the best in four months, as well as a welcome increase in industrial output.
In the U.S., a hotter-than-expected reading of August retail sales, which climbed 0.6% thanks in part to surging gas prices, spooked investors who were looking for a moderation in spending linked to re-advancing inflation.
That's lifted benchmark Treasury bond yields, but likely won't have an impact on the Fed's September policy decision, slated for next Wednesday in Washington, as the broader economy continues to perform well, without overheating, into the autumn months.
However, a spectacular debut for ARM Holdings, the U.K.-based chip designer that listed on the Nasdaq, helped offset any bearish sentiment as the share surged nearly 25% on their opening day of trading.
Benchmark 10-year note yields were last marked at 4.318% in early New York trading, around 4 basis points north of last night's levels, with 2-year paper changing hands at 5.026%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.2% lower at 105.201, although the euro was holding at a six-month low of 1.0663 against the dollar following yesterday's 'dovish' ECB rate hike.
The CME Group's FedWatch indicates a 97% chance that the Fed holds rate steady at between 5.25% and 5.5% next week in Washington, with the odds of a November hike falling to around 29.5%.
Oil prices were also in focus, after WTI crude closed over the $90 a barrel mark for the first time this year last night, following reports from both OPEC and the International Energy Agency that cautioned on supply shortages over the coming months.
Brent crude contracts for November delivery, the global pricing benchmark, were 15 cents higher in late Friday trading at $93.88 per barrel, while WTI crude for October was up 32 cents at $90.68 per barrel.
Heading into the afternoon of the trading day on Wall Street, the S&P 500 was marked 37 points, or 0.81% lower while the Dow Jones Industrial Average slipped 185 points.
The tech-focused Nasdaq was down 173 points, or 1.28% thanks in part to the overnight rise in Treasury yields and the broader slide in U.S. chip stocks.
In overseas markets, the Europe-wide Stoxx 600 was marked 0.47% higher in late Frankfurt dealing while the FTSE 100 added 0.72% in London.
