Nvidia Inc. fell for a second straight day, down 1.1%, as the company’s momentum finally slowed after soaring more than 20% since reporting eye-popping earnings last week. The semiconductor company was the biggest drag on the S&P 500 index on Friday, aside from Microsoft Corp., which fell 1.7%, and Amazon.com Inc., which fell 2.5%.
Non-tech stocks rose after the latest inflation reading was roughly in line with expectations, leaving the question of when the low interest rates Wall Street craves will come.
The bond market was relieved by a decline in Treasury yields, erasing gains earlier in the week that had weighed on stocks.The report said a key measure of inflation came in at 2.7% last month, in line with expectations.Some underlying trends showed a slightly better-than-expected improvement.
That could give the Fed more confidence that inflation is falling sustainably toward its target, which it says is necessary before cutting its key interest rate.
The Federal Reserve has kept the federal funds rate at its highest level in more than two decades in an attempt to slow the economy and tame high inflation. But keeping rates high for too long could stifle economic growth, triggering a recession in which workers lose their jobs and corporate profits plummet.
“The conundrum for the Fed is whether growth will slow faster than inflation,” said Brian Jacobsen, chief economist at Annex Wealth Management. “We’ve gone from rapid growth to rapid slowing very quickly. The road to lower inflation has been a fun one so far, but the last mile will be much harder.”
A U.S. government report on Friday showed consumer spending growth slowed more than economists expected, and Americans’ income growth also slowed last month.
Jeffrey Roach, chief economist at LPL Financial, said the numbers suggest businesses “need to prepare for an environment where consumers won’t be as splurge-y as they were last year.”
Following the report, the yield on the 10-year Treasury note fell to 4.50% from Thursday’s close of 4.55%. It had risen above 4.60% earlier this week on concerns about weak demand following the bond auction.
The yield on the two-year Treasury note, which more accurately reflects expectations of Fed action, fell to 4.88% from Thursday’s close of 4.93%.
Few expect the Fed to cut interest rates when it next meets in less than two weeks, but traders see an 84% chance of at least one rate cut by the end of the year, according to data from CME Group.
Shares in industries that tend to benefit most from easing interest rates led the market on Friday. Real estate stocks in the S&P 500 rose 1.4% overall, the biggest gain among the 11 sectors that make up the index. Boston Properties rose 3.6%.
Gap Inc. beat analysts’ expectations for profit and sales in its latest quarter, growing at the biggest rate in the market at 28.7%. The parent company of Old Navy and Banana Republic reported growth across all of its brands, reversing earlier declines for most of them. The company also raised its sales and profitability forecasts for this year, even as it said the economic outlook remains uncertain.
MongoDB lost 25.5%, or about a quarter, of its market cap, even as its profit and revenue beat expectations. The developer database company gave current-quarter and full-year profit guidance that fell short of analysts’ expectations.
Trump Media & Technology Group Inc. slid 6% in the first trading session after Donald Trump was found guilty of 34 felony counts on Thursday, following an initial gain. The company, which runs the Truth social platform, had previously warned in a filing with U.S. securities regulators that a conviction for Trump could hurt the company.
Overseas stock markets, Asian and European stock indexes were mixed: Tokyo’s Nikkei rose 1.1%, while Hong Kong’s Hang Seng Index fell 0.8%.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
Credit: AP
Credit: AP
Credit: AP
Credit: AP
Credit: AP
Credit: AP
