By DAMIAN J. TROISE, AP Business Writer
Stocks extended their losses on Wall Street on Friday as major indexes ended with another weekly loss. The S&P 500 fell 1.9% and posted its worst weekly performance since March 2020. The Dow Jones Industrial Average fell 1.3% and the Nasdaq lost 2.7%. Technology and communications stocks fell. Netflix plunged more than 20% after the streaming service posted another quarter of disappointing subscriber growth. Treasury yields fell. Inflation fears and worries about the impact of rising interest rates have prompted a cautious shift in the broader market after a solid year of gains in 2021.
(asterisk)(asterisk)(asterisk)THIS IS A BREAKING NEWS UPDATE. (asterisk)(asterisk)(asterisk) AP’s past story appears below.
Stocks extended losses on Wall Street on Friday as major indexes headed for another weekly loss after several days of choppy trading.
The S&P 500 fell 1.6% at 2:59 p.m. EST. The benchmark is on track for its third consecutive weekly loss and its worst since October 2020.
The Dow Jones Industrial Average fell 380 points, or 1.1%, to 34,330 and is also on course for its third straight weekly loss.
The tech-heavy Nasdaq fell 2.2% and was hit particularly hard by higher interest rate expectations. As investors brace for higher interest rates, stocks of expensive technology companies and other expensive growth stocks look relatively less attractive. The index is on track for its fourth straight weekly loss and losses in recent months had left it in what Wall Street considers a market correction on Wednesday, 10% below its peak.
Stocks have fallen all week amid concerns over rising inflation and an upcoming interest rate hike. Tech stocks led, and often abruptly redirected, market momentum.
“The market is working on digesting the magnitude of monetary policy changes that will occur during 2022,” said Bill Northey, chief investment officer at US Bank Wealth Management.
Technology and communications stocks were among the largest weightings in the market.
Video streaming service Netflix plunged 23.1% after posting another quarter of disappointing subscriber growth. Disney, which has also been trying to grow its subscriber base for its streaming service, fell 6.9%.
A mix of retailers, travel-related businesses and other businesses that rely on direct consumer spending also fell.
Bond yields fell significantly. The 10-year Treasury yield fell to 1.75% from 1.83% on Thursday evening. The decline weighed on bank stocks, which rely on higher yields to charge more lucrative interest on loans.
Manufacturers of household goods and utilities, which are generally considered less risky investments, made gains.
Inflation fears and worries about the impact of rising interest rates have prompted a cautious shift in the broader market after a solid year of gains in 2021.
Supply chain issues and higher raw material costs have prompted companies across a wide range of industries to raise prices for finished goods. Many of these companies have warned investors that their profit margins and operations will continue to feel the pinch in 2022.
Rising costs have raised fears that consumers will begin to cut back on spending due to continued pressure on their wallets. The latest retail sales data for December was surprisingly disappointing and showed declining sales.
The Federal Reserve is now expected to raise interest rates sooner and more often than previously announced to combat rising inflation that threatens to derail a fresh economic recovery. . The central bank could start raising rates as early as March. Investors will be watching the Fed closely as officials gather for their final policy meeting next week.
Investors have also been busy reviewing the latest round of corporate earnings, which could give them a better idea of how the companies are dealing with lingering supply chain issues and higher costs.
Paints and coatings maker PPG Industries fell 2.9% after warning investors that it continued to struggle with high raw material costs and supply chain issues. Surgical device maker Intuitive Surgical fell 7.7% after warning that a focus on COVID-19 cases continues to hurt procedure volumes.
Peloton rose 12.3% after the maker of exercise bikes and treadmills said second-quarter revenue would meet previous estimates. The stock fell a day earlier after CNBC reported that Peloton was temporarily halting production of exercise equipment to stem a drop in sales.
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