U.S. stocks end lower as tech weighs on S&P 500 ahead of Fed meeting

U.S. stocks end lower as tech weighs on S&P 500 ahead of Fed meeting

Dow books third straight weekly decline

How stock indexes traded

  • The Dow Jones Industrial Average DJIA fell 190.89 points, or 0.5%, to close at 38,714.77.
  • The S&P 500 SPX fell 33.39 points, or 0.6%, to finish at 5,117.09.
  • The Nasdaq Composite COMP dropped 155.36 points, or 1%, to end at 15,973.17.

For the week, the Dow slipped less than 0.1%, the S&P 500 shed 0.1% and the tech-heavy Nasdaq fell 0.7%. The Dow fell for a third straight week, while the S&P 500 and Nasdaq each booked back-to-back weekly losses.

What drove markets

U.S. stocks ended lower Friday, as the S&P 500’s information-technology sector fell sharply to book a weekly loss.

The market’s fuel from the rise in shares of the megacap companies known as “Big Tech” has started to fade in recent months, said Anthony Saglimbene, chief market strategist at Ameriprise, in a phone interview Friday.

The S&P 500’s decline on Friday left it down 0.1% for the week. The index’s biggest sector, technology, booked a weekly decline of 0.4%.

Some investors are worried that stickier inflation may be a headwind for potential interest-rate cuts from the Federal Reserve, which next week will release projections for possible rate decreases in 2024 after concluding its two-day policy meeting on March 20, said Saglimbene.

After readings earlier this week of both the consumer-price index and producer-price index, there’s “some doubt sown in investors’ minds” that inflation is coming down enough for the Fed to start lowering rates at the pace the market anticipates, he noted.

Traders in the federal-funds futures market are expecting that the Fed will hold its benchmark rate steady at its policy meeting next week and again in May — with a 55.5% chance for a quarter-percentage-point cut in June to a target range of 5% to 5.25%, according to the CME FedWatch Tool, at last check.

Sinead Colton Grant, chief investment officer at BNY Mellon Wealth Management, said in a phone interview that she’s still expecting three rate cuts by the Fed this year.

“We expected that inflation would be stickier on the way down,” Grant said Friday. “If it gets pushed out a little bit from June to July, the key for us is that you would still expect three rate cuts,” she said.

Meanwhile, several Big Tech stocks — a group of megacap companies that span the tech, communication-services and consumer-discretionary sectors — fell Friday. Shares of Microsoft Corp. MSFT, -2.07%, Amazon.com Inc. AMZN, -2.42%, Google parent Alphabet Inc. GOOGL, -1.34% GOOG, -1.50%, Facebook parent Meta Platforms Inc. META, -1.57% and Apple Inc. AAPL, -0.22% all slid.

The S&P 500’s tech, communication-services and consumer-discretionary sectors each closed sharply lower, down more than 1% in Friday’s session.

In economic data released on Friday, the New York Fed’s Empire State business-conditions index, a gauge of manufacturing activity in the state, fell 18.5 points in March, to negative 20.9.

“Manufacturing activity has been in a slump,” said Saglimbene.

In other economic news Friday, U.S. industrial output inched higher in February following a decline in January, while a reading from a closely watched survey of consumer sentiment fell slightly in early March from a 32-month high.

Companies in focus

  • Adobe Inc. ADBE, -13.67% shares sank 13.7% after the company posted its quarterly results.
  • The latest quarterly rebalancing of the S&P 500 will take effect Monday — meaning Friday was the last session for index-fund managers to add shares of Super Micro Computer Inc. SMCI, -5.42% and Deckers Outdoor Corp. DECK, -2.49% and sell shares of Whirlpool Corp. WHR, -0.53% and Zions Bancorp ZION, -0.03%.
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