Stocks moved sharply lower over the course of the trading day on Friday, extending the pullback seen during Thursday’s session. The major averages all showed significant moves to the downside, with the Dow tumbling to its lowest closing level in a month.
The major averages moved roughly sideways going into the close, lingering near their worst levels of the day. The Dow plunged 748.63 points or 1.7 percent to 43,428.02, the Nasdaq dove 438.36 points or 2.2 percent to 19,524.01 and the S&P 500 (SPI:SP500) slumped 104.39 points or 1.7 percent to 6,013.13.
With the steep drop on the day, the major averages also moved sharply lower for the holiday-shortened week. The Dow and the Nasdaq both plummeted by 2.5 percent, while the S&P 500 tumbled by 1.8 percent.
The sell-off on Wall Street came after the University of Michigan released a report showing consumer sentiment in the U.S. deteriorated by much more than previously estimated in the month of February.
The University of Michigan said its consumer sentiment index for February was downwardly revised to 64.7 from a preliminary reading of 67.8. Economists had expected the index to be unrevised.
With the unexpected downward revision, the consumer sentiment index is well below the January reading of 71.7, tumbling to its lowest level since hitting 61.3 in November 2023.
The substantial deterioration by consumer sentiment came amid a surge by year-ahead inflation expectations, which spiked to 4.3 percent in February from 3.3 percent in January, reaching the highest level since November 2023.
Long-run inflation expectations also rose to 3.5 percent in February from 3.2 percent in January, reflecting the largest month-over-month increase since May 2021.
“For both short- and long-run inflation expectations, this month’s increases were widespread and seen across income and age groups,” said Surveys of Consumers Director Joanne Hsu. “Inflation expectations rose this month for Independents and Democrats alike; they fell slightly for Republicans.”
A steep drop by shares of UnitedHealth (NYSE:UNH) also weighed on the Dow, with the health insurance giant plummeting by 7.2 percent to its lowest closing level in ten months.
The plunge by UnitedHealth came after a report from the Wall Street Journal said the Justice Department has launched an investigation into the company’s Medicare billing practices in recent months.
Sector News
Airline stocks moved sharply lower over the course of the session, resulting in a 4.9 percent nosedive by the NYSE Arca Airline Index. The index plunged to its lowest closing level in well over a month.
Substantial weakness was also visible among gold stocks, with the NYSE Arca Gold Bugs Index tumbling by 4.2 percent. The sell-off by gold stocks came as the price of the precious metal pulled back off its record highs.
Semiconductor stocks also saw considerable weakness on the day, dragging the Philadelphia Semiconductor Index down by 3.3 percent.
Networking, brokerage and software stocks also showed significant moves to the downside, while pharmaceutical stocks were among the few groups to buck the downtrend.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday, Hong Kong’s Hang Seng Index spiked 4.0 percent, China’s Shanghai Composite Index advanced by 0.9 percent and Japan’s Nikkei 225 Index rose by 0.3 percent.
Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index climbed by0.4 percent, the U.K.’s FTSE 100 Index closed just below the unchanged line and the German DAX Index edged down by 0.1 percent.
In the bond market, treasuries extended the upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 8.0 basis points to a two-month closing low of 4.420 percent.
Looking Ahead
Quarterly results from AI darling and market leader Nvidia (NVDA) are likely to be in focus next week, while the Federal Reserve’s preferred readings on consumer price inflation may steal the spotlight later in the week.
SOURCE: RTTNEWS