Stocks on Wall Street experienced a decline on Friday, capping off a week that saw a mix of results as reports indicated that inflation, while showing signs of cooling, remains persistent. The S&P 500 dropped by 0.4% but is still on course for a modest gain for the week. Despite reaching a record high earlier in the week, the index has been fluctuating since then. The Dow Jones Industrial Average also fell by 0.1%, shedding 55 points, while the Nasdaq composite saw a 0.6% decrease.
Technology stocks played a significant role in dragging down the market, with software giant Adobe witnessing a notable 13.9% decline after providing a less-than-optimistic revenue forecast. Consumer sentiment, as indicated by a report from the University of Michigan, unexpectedly decreased in March. While consumers displayed a slightly less optimistic outlook on the economy, they still anticipate a further decrease in inflation, hinting at a potential stabilization of consumer prices.
The prevailing concern on Wall Street continues to be inflation, with hopes pinned on the Federal Reserve initiating interest rate cuts. The Fed had significantly raised interest rates in 2022 to combat inflation, which had surged to as high as 9.1%. Recent reports on consumer prices have shown a persistent inflation rate, rising to 3.2% in February from 3.1% in January. Wholesale prices also exceeded Wall Street's expectations, indicating ongoing inflationary pressures.
Despite some signs of economic softening, there is optimism for a sustained long-term alleviation of inflation. The upcoming release of interest rate forecasts by Fed officials following their policy meeting is eagerly awaited, with market data suggesting a potential rate cut in June. The central bank had previously hinted at three rate cuts in 2024, aiming to ease economic and financial strain.
Bond yields saw a slight increase, with the 10-year Treasury yield rising to 4.31% and the 2-year Treasury yield climbing to 4.72%. In global markets, European exchanges mostly saw gains, while Asian markets experienced declines.
