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U.S. stocks were trading lower Friday as investors worried about inflationary pressures ahead of the Federal Reserve’s meeting next week as well as an auto workers strike. Major stock benchmarks were clinging to weekly gains.
How stock indexes are trading
-
The Dow Jones Industrial Average
DJIA
shed almost 168 points, or 0.4%, to around 34,740. -
The S&P 500
SPX
fell nearly 35 points, or 0.8%, to 4,470. -
The Nasdaq Composite
COMP
dropped almost 158 points, or 1.1%, to 13,768.
For the week, the Dow was on pace to rise 0.5%, the S&P 500 was on track to gain 0.3% and the Nasdaq was heading for a 0.1% increase, according to FactSet data, at last check.
What’s driving markets
Inflation worries are keeping pressure on stocks as Treasury yields edge higher, while investors also expressed concern over the start of an auto worker strike.
“The picture of inflation continues to be difficult,” said Marco Pirondini, head of equities for Amundi US, in a phone interview Friday. “The market is starting to understand that the Fed will keep interest rates high for longer.”
The Federal Reserve, which has been tightening monetary policy in a bid to cool the economy and bring down the elevated cost of living in the U.S., will hold a policy meeting next week. Traders are expecting the central bank will keep its benchmark rate at the current target range of 5.25% to 5.5%.
The U.S. economy continues to be “fairly strong,” which makes it more difficult to bring down inflation, according to Pirondini. Fresh economic data on Friday came in stronger than anticipated for U.S. industrial output and manufacturing activity in New York State.
The Fed said Friday that industrial production in the U.S. rose 0.4% in August. That exceeded the 0.2% gain forecast by economists surveyed by the Wall Street Journal.
Meanwhile, the New York Fed released data from its Empire State manufacturing survey on Friday, with the business conditions index climbing to 1.9 this month. Economists polled by the Wall Street Journal had expected a negative reading on manufacturing activity in the state.
Investors were also monitoring the start of a strike of the United Auto Workers against the Big Three U.S. automakers, Ford
F,
General Motors
GM,
and Chrysler owner Stellantis
STLA,
Some analysts worry that the auto workers strike could drive up car prices, adding more fuel to inflationary pressures that have started to re-emerge over the summer while stoking fears about the impact on the broader U.S. economy.
“It’s unsettling, especially in this period right now where we are starting to see a slowdown in economic data. When you look at the history, there’s a hit to the economy and the hit to jobs that can come from a strike like this,” said Liz Ann Sonders, chief investment strategist at Charles Schwab, during a phone interview with MarketWatch.
Survey data released by the University of Michigan showed consumer sentiment falling in September for a second month in row: The preliminary reading of the sentiment survey dropped to 67.7 this month from 69.5 in August.
At the same time, the survey showed Americans think inflation will average 3.1% in the next year, down from 3.5% in the prior month and the lowest reading in two and a half years.
Meanwhile, rising Treasury yields have weighed on U.S. equities in recent weeks. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was up four points on Friday afternoon at 4.33%, according to FactSet data, at last check.
Also, the the expiration of $3.4 trillion in stock options on Friday could drive up volatility. According to data from Nomura, 10 of the past 11 expiration days in September saw the S&P 500 finish lower.
Companies in focus
-
General Motors Co.
GM,
+0.79%
shares rose alongside those of Ford Motor Co.
F,
-0.12%
Stellantis NV
STLA,
+2.10%
after nearly 13,000 United Auto Workers at the three companies went on strike early Friday as a deadline passed with no agreement with the carmakers. The combined strike breaks with UAW tradition, which had directed strike efforts for one car company only to protect its strike fund and picket-line firepower. -
ARM Holdings PLC‘s
ARM,
-0.06%
American depositary receipts were adding to their gains from their stunning market debut after closing Thursday 25% above their IPO listing price as execs see a big opportunity in saving chip makers money. -
Adobe Inc. shares
ADBE,
-4.68%
fell after the software company forecast revenue in line with Wall Street estimates and steady margins as it rolls out a paid version of its Firefly AI. -
Planet Fitness
PLNT,
-13.56%
shares tumbled after the company announced the departure of CEO Chris Rondeau. -
Walt Disney‘s
DIS,
+0.32%
stock rose after a company representative said it hasn’t yet decided on what it will do with ABC and other broadcast channels that CEO Bob Iger has suggested could be sold.
Steve Goldstein contributed to this report.
