The major averages closed mixed as they started the day with the markets closing down for the week as investors brace for tighter monetary policy from the Federal Reserve. The Dow Jones Industrial Average climbed 137 points, or 0.4%, while the S&P 500 closed down 11 points after opening the day in the red. The Nasdaq Composite fell 186 points or 1.3%, on pace for its first weekly loss in four weeks.
Friday's market moves come as investors continue to react to a changing tone by the Federal Reserve, signaling it will act even more aggressively to fight inflation.
Tech stocks led the day's losses as investors dumped the riskier shares in anticipation of higher interest rates limiting the group's future profit growth. Chipmakers like Nvidia and Micron, which have struggled amid supply chain shortages and concerns of a looming recession, dipped 4% and 1.5%, respectively, while shares of Tesla, Alphabet, and Apple inched lower.
Shares of Robinhood slipped 5% after Goldman Sacks downgraded the trading app to sell from neutral and UPS fell 1% on the back of a downgrade from Bank of America citing concerns about weakening demand and declining prices in the industry.
The health-care and consumer staples sectors rallied this week as investors worried about a slowing economy pivoted toward stocks with stable earnings. Merck, Home Depot and UnitedHealth Group inched higher again on Friday. Meanwhile, financial sector companies like JPMorgan Chase and American Express rebounded, giving up some of the week's earlier losses.
Friday's moves come after the Fed released minutes from its March meeting on Wednesday, which revealed that policymakers plan to reduce their bond holdings by a consensus amount of about $95 billion. The central bank is also considering interest rate hikes of 50 basis points in future meetings.
Earlier in the week, strong comments by Fed Governor Lael Brainard indicated the central bank could start reducing its balance sheet at a "rapid pace" as soon as May.
The pivot by the Fed has caused rates to shoot higher, with the 10-year Treasury yield hitting a new three-year high Friday, rising above 2.7%. The rate ended last week at 2.38% and started the year at 1.63%.
Oil prices, which have been volatile during the Russia-Ukraine war, rose slightly on Friday. U.S. West Texas Intermediate (WTI) crude added 0.5% to $96.52 per barrel, while Brent crude gained 0.5% and topped $101 per barrel. Energy companies including Occidental Petroleum and Halliburton moved higher on Friday.
Despite a mild rebound Thursday, the major averages were headed for weekly declines. The S&P 500 and Nasdaq were down 1% and 2.6%, respectively, through Thursday's close. The Dow was down 0.7% week to date. The S&P 500 and the Nasdaq are on track for their first weekly losses in four weeks. Meanwhile, the Dow is headed for back-to-back weekly declines.
Investors are also looking ahead to earnings season, which will kick off next week with reports from five big banks. JPMorgan will report before the bell on Wednesday. Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo will report before markets open on Thursday.
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