FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 28, 2023. Portal/Brendan McDermid/File Photo Acquire License Rights
- All three indices are posting quarterly declines
- PCE data shows underlying price pressures are easing
- Republicans reject funding bill, government shutdown imminent
- Nike shares rise after beating first quarter profit
Sept 29 (Portal) – The S&P 500 closed lower on Friday as investors digested the impact of a U.S. inflation report on Federal Reserve interest rate policy and adjusted their portfolios for stocks on the final day of a weak third quarter.
The benchmark S&P 500 also posted its largest monthly percentage decline of the year.
The data showed that the personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, rose 3.9% on an annual basis in August, falling below 4% for the first time in over two years. The Fed tracks PCE price indices for its 2% inflation target.
The data showed a “better than expected but still elevated inflation picture,” said Eric Freedman, chief investment officer at US Bank Asset Management.
Meanwhile, Freedman said, “We’re at the end of the quarter, and with the end of the quarter comes all sorts of activity in both the stock and bond markets.”
According to preliminary data, the S&P 500 (.SPX) lost 11.37 points, or 0.26%, to close at 4,288.33, while the Nasdaq Composite (.IXIC) gained 18.05 points, or 0.18%, to 13,224.52 . The Dow Jones Industrial Average (.DJI) fell 145.92 points, or 0.46%, to 33,511.55.
Among the S&P 500 sectors, energy (.SPNY) and financials (.SPSY) saw sharp declines. The energy sector remained by far the sector with the largest increases in the third quarter.
“Energy and financial stocks have risen in relative terms and are feeling some offsetting effect today,” Freedman said.
All three major indexes posted their first quarterly declines in 2023.
The highly anticipated PCE data followed the Fed’s hawkish long-term interest rate outlook last week, which rattled stocks as benchmark Treasury yields climbed to 16-year highs.
“Stock investors are finally waking up to the Fed and the Fed is saying that interest rates will be higher for longer and that there is an alternative to stocks,” said Paul Nolte, senior wealth advisor and market strategist at Murphy & Sylvest Wealth Management.
Investors were also watching Washington. Hardline Republicans in the U.S. House of Representatives rejected a bill proposed by their leader to temporarily fund the government, making it all but certain that federal agencies will be partially closed starting Sunday.
Traders also feared that a $16 billion JP Morgan fund expected to reset its options positions on Friday would provide another source of market volatility.
In corporate news, shares of Nike (NKE.N) rose after the world’s largest sportswear maker beat Wall Street estimates for first-quarter profit.
Reporting by Lewis Krauskopf in New York, Shashwat Chauhan and Shristi Achar A in Bengaluru; Edited by Arun Koyyur, Maju Samuel and David Gregorio
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