US stocks fell on Friday as traders fretted over hot inflation data and continued to dial back their expectations for rate cuts in 2024. All three benchmark indexes ended the lower, while bond yields ticked slightly higher.
The S&P 500 ended with its second straight weekly loss.
Both consumer and producer prices came in hotter than expected this week, with the consumer price index rising 3.2% and the producer price index rising 1.6% year-per-year, the Bureau of Labor Statistics reported.
Hot inflation is the Fed’s main focus, and investors are growing concerned that central bankers could end up holding interest rates higher for a lot longer to keep prices from surging again, especially as the economy looks to be going strong.
“Inflation reports this week served as a reminder that normalization is not a straight line, and pressures remain in many pockets,” Mark Hackett, Nationwide’s chief of investment said in a note on Friday.
The Fed’s next policy meeting is just around the corner, with central bankers set to begin the two-day policy meeting next Tuesday to decide the next policy move. Markets are pricing in a near-100% chance the Fed will keep rates unchanged this month, according to the CME FedWatch tool.
Investors also continued to dial back their expectations for rate cuts for the rest of the year. Markets are now pricing just a 30% chance the Fed could slash rates by 100 basis points or more by December, down from a 64% probability priced in a month ago, and odds of a June rate cut have come down to about a coin-toss.
Here’s where US indexes stood at the 4:00 p.m. closing bell on Friday:
Here’s what else is going on today:
In commodities, bonds, and crypto:
West Texas Intermediate crude slipped 0.36% to $80.98 a barrel. Brent crude, the international benchmark, fell 0.1% to trade at $85.28 a barrel. Gold ticked 0.19% lower to $2,157.55 per ounce. The 10-year Treasury yield was about flat at 4.30%.Bitcoin rose 0.26% to $70,230.
