The benchmark S&P 500 fell in choppy trading on Friday and was on track to end the week lower, along with the Nasdaq and the Dow, as investors weighed a mixed run of economic data against a widening Middle East conflict.
The financials-heavy Dow was hit the hardest this week, putting it on track for its biggest monthly losses since December 2024.
A Commerce Department report showed economic growth slowed more sharply in the fourth quarter, following downward revisions to consumer spending and business investment, while a separate report indicated that consumer spending increased slightly more than expected in January.
Traders now see one 25 basis point interest rate cut by the Federal Reserve by June 2027, compared with expectations of two cuts earlier this month, according to LSEG-compiled data. Barclays now expects two 25-basis-point rate cuts, with one in September this year and the next in March 2027.
“This adds to the stagflation narrative, which is one of the big market fears. If we’re going to continue to see pressures from higher oil prices while at the same time the economy is slowing, that’s not exactly a good combination,” Steve Sosnick, chief market analyst, Interactive Brokers
The Fed will potentially leave interest rates unchanged when it meets next week. Spiking energy costs could complicate the central bank’s policy plans as other reports point to price pressures and a softening job market.
Meanwhile, the University of Michigan’s survey showed consumer sentiment ebbed in early March on worries about higher energy costs.
Crude prices hovered near $100 a barrel as hostilities in the Middle East showed few signs of easing despite the Trump administration’s assurances of a swift resolution.
Efforts such as the International Energy Agency’s record emergency oil releases, and the U.S. 30-day license for countries to buy Russian oil and petroleum products stranded at sea have so far failed to bring down the surge in costs.
At 11:30 a.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab rose 7.82 points, or 0.02%, to 46,685.67, the S&P 500 (.SPX), opens new tab lost 16.01 points, or 0.24%, to 6,656.61 and the Nasdaq Composite (.IXIC), opens new tab lost 104.09 points, or 0.47%, to 22,206.61.
Wall Street’s fear gauge, the CBOE volatility index (.VIX), opens new tab, wavered and was last down 0.13 points at 27.16, while the rate-sensitive Russell 2000 index (.RUT), opens new tab fell 0.3%.
Six of the 11 S&P 500 sectors edged higher, with utilities (.SPLRCU), opens new tab leading with a 1% rise, while heavy-weight tech stocks (.SPLRCT), opens new tab fell 1.1%.
Credit quality worries deepened this week after Morgan Stanley (MS.N), opens new tab halted redemptions at one of its private credit funds, following similar moves by BlackRock (BLK.N), opens new tab and Blue Owl (OWL.N), opens new tab in recent weeks.
JPMorgan Chase (JPM.N), opens new tab also restricted lending to private credit players, while Blackstone (BX.N), opens new tab faced a surge in redemptions.
Blue Owl rose 2.7%, and BlackRock edged up 1.4% each, rebounding from sharp losses in the previous session.
The broader S&P 500 financial sector (.SPSY), opens new tab fell 2.7% for the week.
Travel stocks, hit the hardest by the war, and higher energy costs, were mixed
Alaska Airlines (ALK.N), opens new tab and American Airlines (AAL.O), opens new tab slipped 1.2%, while Carnival (CCL.N), opens new tab rose 1.3%.
Design software maker Adobe <ADBE.O, opens new tab> fell 6.6% as longtime CEO Shantanu Narayen will leave his role once a successor is appointed, renewing worries around its strategy as it grapples with AI disruption.
Crypto-firm Strategy (MSTR.O), opens new tab climbed 4.9% as bitcoin prices rose more than 4%.
Megacap Meta <META.O, opens new tab> slipped 3% as a report said it postponed the release of its artificial intelligence model “Avocado” to at least May, from this month.
Declining issues outnumbered advancers by a 1.17-to-1 ratio on the NYSE and by a 1.24-to-1 ratio on the Nasdaq.
The S&P 500 posted 11 new 52-week highs and 7 new lows while the Nasdaq Composite recorded 29 new highs and 123 new lows.
