Market Snapshot: Dow ends lower in mixed finish for U.S. stocks, S&P 500 suffers worst week since March 2020

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U.S. stocks ended mixed Friday, with the Dow Jones Industrial Average erasing gains late in the session, as investors continued to weigh concerns over slowing economic growth and a more aggressive Federal Reserve.

All three major stock benchmarks booked a third straight week of losses, with the S&P 500 seeing its worst weekly percentage drop since March 2020, according to Dow Jones Market data.

How did stock indexes perform?

The Dow Jones Industrial Average
DJIA,
-0.13%

fell 38.29 points, or 0.1%, to close at 29,888.78.

The S&P 500
SPX,
+0.22%

rose 8.07 points, or 0.2%, to finish at 3,674.84.

The Nasdaq Composite Index
COMP,
+1.43%

climbed 152.25 points, or 1.4%, to end at 10,798.35.

On Thursday, the Dow tumbled 2.4% to finish at 29,927.07, the lowest finish since December 2020, both for that index and the S&P 500, which closed down 3.3% to 3,666.77. The Nasdaq Composite fell 4.1% to 10,646.10, its lowest finish since September 2020, according to Dow Jones Market Data.

For the week, the S&P 500 dropped 5.8%, while the Dow and Nasdaq each fell 4.8%. All three indexes dropped for a third straight week, with the Dow seeing its biggest weekly percentage decline since October 2020 and the S&P 500 booking its worst week since March 2020, according to Dow Jones Market Data.

What drove markets?

U.S. stocks opened higher early Friday before turning lower, then rebounding in volatile trading that was attributed to “quadruple witching” — the simultaneous expirations of stock-index futures, stock-index options, stock options, and single stock futures — which happens once per quarter, according to Joe Saluzzi, co-head of equity trading at Themis Trading.

“It was a bad week, it was a really bad week,” Saluzzi said. “The Federal Reserve certainly didn’t give us any confidence this week…we’re kind of stuck right now.”

Saluzzi told MarketWatch on Friday that the combination of these two factors was weighing on stocks. He speculated that there could be more losses ahead with the Cboe Volatility Index
VIX,
-5.52%

elevated at above 30, but still below a reading of 40 that might indicate to some a genuine capitulation by investors.

Investors are still trying to come to grips with Wednesday’s interest-rate hike by the Federal Reserve, the biggest since 1994.

“The inflation dragon needs to be slain and the Federal Reserve is sending signals that it’s on it,” said Scott Knapp, chief market strategist at CUNA Mutual Group in a phone interview Friday. The Fed’s large rate hike this week of three-quarters of a percentage point is “stage-setting for a meaningful slowdown in the economy and markets are adjusting accordingly.”

Markets had a bruising week of losses, with the S&P 500 dropping 5.8% for its biggest weekly loss since March 2020, according to Dow Jones Market Data.

See: What the Fed’s biggest rate hike in decades means for the bear market in bonds

A mixed bag of data this week has driven concerns that the U.S. economy is slowing, said Saxo Bank strategists in a note Friday. Equity traders can’t decide if they should “celebrate weak data as something that will eventually lead U.S. yields lower and see the pace of Fed tightening eventually reversing or fret weak data because of the implications for corporate profits,” they added.

On Friday, investors received the May reading on U.S. industrial output, which came in below expectations but remained in positive territory, indicating a fifth month of growth. Industrial output was “soft,” said CUNA’s Knapp, adding that the economy is “slowing very quickly.”

Read: The U.S. economy is slowing and likely to soften further, leading indicators show

Saxo said the next data points to watch will be preliminary services and manufacturing PMI surveys for June, due next week. U.S. markets will be closed on Monday for the Juneteenth federal holiday.

On Friday morning, investors heard from Chairman Jerome Powell, who delivered opening remarks at the Inaugural Conference on the International Roles of the U.S. Dollar. Powell said the Fed is “acutely focused on returning inflation to our 2% objective,” but as his remarks mostly were about the role of the dollar as the world’s reserve currency, his comments didn’t offer new insights on the outlook for monetary policy.

Minneapolis Federal Reserve President Neel Kashkari said in a blog post Friday that he could support another rate hike of 75 basis points in July. He wrote that a “prudent strategy” after the July meeting might be to continue with rate hikes of 50 basis points until inflation is “well on its way down” to 2%.

Read: The odds of recession are rising, but the U.S. economy is not doomed to a downturn

Which companies were in focus?

Adobe Inc.
ADBE,
-1.18%

shares fell 1.2% after a revenue guidance tweak.

Shares of Mereo BioPharma Group
MREO,
+62.50%

jumped 62.5% to $1.30 after the Times reported, without attribution, that AstraZeneca PLC
AZN,
+0.38%

AZN,
+1.68%

is considering a bid for the London-based, U.S.-listed biotech.

Diamondback Energy
FANG,
-8.52%

and Devon Energy
DVN,
-8.30%

were among oil-and-gas companies trading down as crude prices fell, with Diamondback finishing 8.5% lower and Devon dropping 8.3%.

The U.S.-listed shares of China-based companies saw gains Friday after Reuters reported that China’s central bank accepted Ant Group’s application to set up a financial holding company. Alibaba Group Holding Ltd.
BABA,
+0.78%

shares rose 0.8%.

Revlon shares
REV,
+91.28%

surged 91.3% on reports that Indian conglomerate Reliance Industries was moving to buy the troubled cosmetics company.

How did other assets fare?

The yield on the 10-year Treasury note BX:TMUBMUSD10Y fell 6.5 basis points to 3.238%, according to Dow Jones Market Data. Yields and debt prices move in opposite directions.

The ICE U.S. Dollar Index 
DXY,
+0.96%
,
 a measure of the currency against a basket of six major rivals, was up 1%.

Bitcoin 
BTCUSD,
-0.23%

was trading 0.6% lower at $20,551.

Oil futures
CL.1,
-6.43%

fell, with West Texas Intermediate crude for July delivery settling 6.8% lower at $109.56 a barrel. U.S. oil prices saw a weekly loss of more than 9%, snapping seven straight weeks of gains, according to FactSet data.

Gold 
GC00,
-0.33%

 for August delivery
GCQ22,
-0.33%

slipped 0.5% to settle at $1,840.60 an ounce.

In European equities, the Stoxx Europe 600 
SXXP,
+0.09%

closed 0.1% higher Friday, but booked a weekly loss of 4.6%. London’s FTSE 100 Index ended 0.4% lower Friday, sliding 4.1% for the week.

In Asia, the Shanghai Composite 
SHCOMP,
+0.96%

finished 1% higher Friday, booking a 1% weekly gain. The Hang Seng Index 
HSI,
+1.10%

rose 1.1% Friday, paring its losses for the week to about 3.4%. Japan’s Nikkei 225 
NIK,
-1.77%

closed 1.8% lower Friday, bringing its weekly loss to 6.7% .

–Barbara Kollmeyer contributed to this report.

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