Stocks Close Slightly Higher on Friday, but End the Week Lower Amid Inflation Concerns
U.S. stocks closed slightly higher on Friday, but ended the week lower as investors awaited upcoming U.S. inflation readings and weighed mixed signals from Federal Reserve officials on the pace of interest rate hikes.
The Dow Jones Industrial Average rose 75.86 points, or 0.22%, to 34,576.59, the S&P 500 gained 6.35 points, or 0.14%, to 4,457.49, and the Nasdaq Composite added 12.69 points, or 0.09%, to 13,761.53.
For the week, the S&P 500 fell 1.3%, the Nasdaq lost 1.9%, and the Dow fell 0.8%.
Investors are concerned that rising inflation could lead the Fed to raise interest rates more aggressively than expected. The Consumer Price Index (CPI) for August, due out on September 13, is expected to show that inflation remained elevated in August.
The CPI is a key measure of inflation and is closely watched by the Fed. If the CPI comes in higher than expected, it could pressure the Fed to raise interest rates more aggressively.
Ahead of the CPI data, investors sold tech stocks, which are more sensitive to interest rates. Apple fell 0.3% on Friday, while the S&P 500 technology sector closed higher.
Energy stocks were the biggest gainers on Friday, as oil prices rose. The S&P 500 energy sector rose 0.97%.
Mixed comments from Fed officials have also fueled uncertainty about the future direction of interest rates. New York Fed President John Williams kept his options open this week, while Dallas Fed President Lorie Logan said that while it “could be appropriate” to keep rates steady at the next meeting, more tightening might be needed.
The Fed is expected to raise interest rates by 25 basis points at its next meeting on September 20-21. However, the market is also pricing in a possible 50 basis point hike, depending on the CPI data.
Overall, the stock market was volatile on Friday as investors awaited the CPI data and Fed decision. The market is likely to remain volatile in the coming weeks as investors continue to assess the inflation outlook and the Fed’s monetary policy stance.
In addition to the factors mentioned above, other factors that could affect the stock market in the coming weeks include:
- The outcome of the U.S. midterm elections in November.
- The war in Ukraine and its impact on global energy and food prices.
- The pace of economic growth in the United States and other major economies.
Investors will be closely monitoring these factors as they make investment decisions in the coming weeks.
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