The S&P 500 fell on Friday as investors pored over the latest earnings reports and assessed tougher language from Federal Reserve speakers.
The broad market index was lower by 0.1%, while the Nasdaq Composite dropped 0.7%. The Dow Jones Industrial Average rose slightly by 48 points, or 0.1%.
All of the major averages are on pace for down weeks — the Dow is down 0.5% for the week, while the S&P and Nasdaq are lower by 1.3% and 2.1%, respectively. All three indexes are positive for the month, however.
Friday’s moves come after a down session on Wall Street in which comments from Fed officials raised concern over tighter U.S. monetary policy.
St. Louis Federal Reserve President James Bullard said Thursday that “the policy rate is not yet in a zone that may be considered sufficiently restrictive.” He suggested that the appropriate zone for the federal funds rate could be in the 5% to 7% range, which is higher than what the market is pricing.
“We continue to think investors should place much more emphasis on the actual data and not focus too much on Fed rhetoric (the former will show where inflation is headed while the latter is fixated on where it was),” said Adam Crisafulli, founder of Vital Knowledge. “That said, investors are tired of battling the Fed’s daily tape bombs and the fear is it may take 2-3 more CPIs for officials to stop admonishing the market every time it tries to rally.”
Investors have responded to each new piece of economic data or any language in recent weeks that could indicate what the Fed will do next with interest rates. Shelby McFaddin, investment analyst at Motley Fool Asset Management, said the comments on inflation led investors to believe the Fed does not think the economy has cooled enough.
“There’s absolutely been a thirst for relief and a tug of war,” she said of investor response over recent days. “But at the end of the day, it really just depends on this inflationary period becoming deflationary slower than it ramped up, and on what the Fed decides to do next.”