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Major market averages opened trading higher on Friday but look to end the week on a sour note as traders weighed latest economic data and commentary from Federal Reserve officials, which indicate that the central bank will likely maintain its tight monetary stance for longer than hoped.
The Nasdaq Composite (COMP.IND) was +0.4%, the S&P 500 (SP500) was +0.3%, and the Dow (DJI) was +0.1%.
Initial jobless claims fell for the fourth straight week to 216K – much lower than the 234K expected by economists.
”For the U.S. economy, the labor market is not softening quickly enough and that makes the Fed stick to the hawkish script that they might not be done raising rates” said Edward Moya, senior market analyst, OANDA.
The 10-year Treasury yield (US10Y) dipped 4 basis points to 4.21% and the 2-year yield (US2Y) was down 2 basis points at 4.92%. See how rates are trading across the curve.
Fed officials agree that more needs to be done in the fight against inflation, and the central bank’s moves will depend on incoming economic data.
“The significantly lower inflation in recent months is encouraging,” said Dallas Fed President Lorie Logan. “But lower inflation isn’t necessarily low-enough inflation.”
New York Fed’s John Williams echoed these views, saying the central bank will need to closely assess data to decide if policy is restrictive enough.
While the Fed is widely expected to keep rates unchanged at its meeting this month, markets are still divided on whether a hike is warranted this year, according to the CME FedWatch Tool.
China’s ban of iPhone use for government agencies also weighed on sentiment. ”Apple’s (AAPL) growth story is heavily reliant on China and if the Beijing crackdown intensifies, that could pose a big problem to other mega-cap tech companies that rely on China,” Moya warned. However, some believe the issue may be overblown.
See the stocks making the biggest moves this morning.
