Market Volatility Persists as Investors Weigh Economic Data
As the Federal Reserve prepares to meet next week, investors are exercising caution, avoiding major bets and scrutinizing fresh economic data to gauge the health of the economy. The benchmark S&P 500 and Nasdaq struggled to find direction on Friday, while Boeing’s quarterly profit warning sent its shares tumbling.
Economic Indicators Paint a Mixed Picture
A recent S&P Global survey revealed that business activity slowed to a nine-month low in January, largely due to rising price pressures. However, firms reported higher hiring, supporting the Federal Reserve’s cautious approach to monetary policy this year. Meanwhile, the University of Michigan’s final estimate on consumer sentiment dropped to 71.1, down from a previous estimate of 73.2.
Interest Rate Expectations Shift
Traders now expect the Fed to deliver its first rate cut in June, according to data compiled by LSEG. This shift in expectations comes as investors weigh the impact of tariffs on the economy. President Donald Trump’s recent comments on tariffs have sparked concerns about a potential global trade war, inflation pressures, and the Fed’s pace of interest rate cuts.
Earnings Season Brings Mixed Results
American Express reported a 12% jump in fourth-quarter profit, but its shares fell 2.7% and weighed on the blue-chip Dow. Boeing, on the other hand, lost 0.5% after warning of a fourth-quarter loss of about $4 billion. Verizon rose 0.8% after reporting higher-than-expected fourth-quarter subscriber additions.
Tariffs Remain a Key Concern
Investors are keeping a close eye on tariffs, which could be announced on Feb. 1 or April 1. While some analysts believe the impact of tariffs on inflation may be overstated, others worry that they could spark a global trade war and slow the Fed’s pace of interest rate cuts.
Market Performance
At 10:16 a.m. ET, the Dow Jones Industrial Average fell 101.48 points, or 0.24%, to 44,459.53, the S&P 500 lost 3.62 points, or 0.06%, to 6,115.09, and the Nasdaq Composite lost 17.56 points, or 0.09%, to 20,034.29. Eight of the 11 S&P 500 sectors rose, with utilities leading with a 0.7% gain. On a weekly basis, Wall Street’s main indexes are set for their second straight week of advances, with the blue-chip Dow on track for its biggest weekly jump since October 2022.
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