Wall Street’s worst week since early December appears to be heading for a quiet end, with stocks mixed Friday as worries build about the economy’s strength.
© Provided by LA Times
Traders work on the floor of the New York Stock Exchange. (Seth Wenig / Associated Press)
The Standard & Poor’s 500 was 0.2% higher in early trading. The Dow Jones industrial average was down 27 points, or 0.1%, at 33,017, as of 9:45 a.m. Eastern time, while the Nasdaq composite was 0.6% higher.
Load Error
The modest moves have the S&P 500 heading for a loss of 2.3% this week, largely because of concerns that the economy may not be able to avoid a recession. Several reports came in weaker than expected, highlighted by one showing U.S. shoppers spent less at retailers, as the full weight of the Federal Reserve’s interest rate hikes last year start to make their way through the economy.
Not long ago, bad news on the economy was often perversely good news for Wall Street. That’s because investors took it to mean the Fed may ease up on its rate hikes. But bad news on the economy is increasingly becoming bad news for Wall Street, too, which now sees it as increasing the risk of a recession.
Making things more complicated, several Fed officials through the week kept repeating the message that they’ll likely hike rates further and hold them there a while to make sure the nation’s high inflation is really tamed. Even though inflation has begun to slow, pressure remains from a still-solid U.S. jobs market and other factors.
Many investors came into this week already forecasting a modest or short recession, but they also were hoping for a rebound in markets toward the end of the year because of expectations for the Fed to cut interest rates to prop up the economy. This week’s sour economic data and comments from central bankers put dents in such hopes.
Gains for tech-oriented stocks were helping to keep Wall Street relatively steady Friday. Google’s parent company said it was cutting costs by laying off 12,000 workers and Netflix reported a surge in its subscriber base.
Alphabet rose 4.8% after becoming the latest Big Tech company to acknowledge it expanded too quickly in recent years amid a boom created by the pandemic. Netflix jumped 7.9%.
On the losing end was Nordstrom, which said it had to slash prices to clear out inventory during the holiday shopping season. Its stock fell 1.4% after it cut its profit forecast.
Stock markets overseas mostly made modest gains.
The Nikkei 225 added 0.6% after Japan reported that its consumer inflation rate hit 4% in December, its highest level in 41 years. The high reading may add to pressures on the Bank of Japan to alter its longstanding policy of keeping its key interest rate at an ultra-low level of minus-0.1%. But economists expect price pressures to ease in coming months as inflation elsewhere declines.
AP business writers Joe McDonald and Matt Ott contributed to this report.
This story originally appeared in Los Angeles Times.