Stocks closed lower on Friday, capping off a brutal month for Wall Street. Investors were digesting the latest inflation data, which could impact expectations for future interest rate hikes by the Federal Reserve. The S&P 500 reversed earlier gains and ended the day below the flatline, while the Dow Jones Industrial Average traded 0.3% lower. The tech-heavy Nasdaq Composite also struggled to hold on to its gains and closed up around 0.4%. September was a rough month for the major indexes, with drops of between 3% to 5%, primarily driven by surging oil prices and concerns over the Fed’s interest rate strategy.
The release of the Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation indicator, was a focal point for investors on Friday. The August data showed that core PCE, which excludes food and energy, rose 3.9% on the year, the lowest level in almost three years and down from July’s 4.2%. A cooling of inflation could dampen expectations of a rate hike in November by the Fed.
Comments from Fed officials helped soothe rate jitters, providing some relief for bond yields on Friday. The yield on 10-year Treasuries fell after hitting levels not seen in over 15 years. However, the 30-year Treasury yield retreated but remains on track for its biggest jump since 2009, causing anxiety about the impact of the bond rout.
Additionally, concerns about a looming US government shutdown continue to weigh on investors. Lawmakers are unlikely to reach an agreement before the midnight Saturday deadline, leading to potential harm to the economy and stock market.
In individual stock news, shares of Nike rose over 7% after reporting better-than-expected first-quarter profit and expressing confidence in Chinese demand.
Twitter CEO Meets with Banks to Discuss Debt Relief Plan
X CEO Linda Yaccarino is set to meet with seven banks that funded Elon Musk’s takeover of Twitter in an effort to discuss a plan for debt relief. The banks have been holding onto $13 billion of debt from the acquisition and are hoping to sell it to other investors. Yaccarino, who joined Twitter in June, aims to reclaim advertisers and build a sustainable business with revenue streams beyond ads.
During an interview at the 2023 Code Conference earlier this week, Yaccarino revealed that the platform has between 200 million and 250 million daily active users and that it is close to breakeven from an operating cash flow perspective. Twitter experienced an operating loss of $344 million in July 2022.
Stocks Leading Yahoo Finance’s Trending Tickers Page
Several stocks were trending on Yahoo Finance’s trending tickers page during afternoon trading on Friday. Carnival Corporation saw a more than 6% drop in shares after reporting stronger-than-expected third-quarter earnings but providing a muted near-term profit outlook. Duolingo, the language learning company, continued to climb with a 4% increase after receiving a Buy rating from UBS. AMD, the chipmaker, gained 0.6% after positive comments from Microsoft’s CTO about the importance of AMD’s graphics cards for tech businesses. Blue Apron saw its stock more than double after announcing a $103 million sale to the food-delivery startup Wonder.
Stocks Little Changed in Afternoon Trading
After starting the day in positive territory, stocks wavered and closed little changed in afternoon trading. The S&P 500 rose by 0.2%, while the Dow Jones Industrial Average decreased by 0.1%. The tech-heavy Nasdaq Composite gained 0.7%.
What Rising Bond Yields Mean for Investors
This week, the yield on 10-year Treasuries reached levels not seen in over 15 years, surpassing 4.6%. Bond yields are closely watched as a benchmark for borrowing costs and have a significant impact on the value of other assets. Higher bond yields can provide an alternative to stocks, especially during times of market volatility, as investors move their money from stocks into bonds. The boosted yields can be favorable for investors with a lower risk appetite. However, the uncertainties of the stock market and the impact of higher bond yields continue to be a concern for investors.
Sources:
– Fed’s Preferred Inflation Gauge: Personal Consumption Expenditures (PCE) index
– Nike’s Q1 Profit: Nike earnings report
– Twitter CEO’s Debt Relief Plan: Financial Times
– Stocks Leading Yahoo Finance’s Trending Tickers Page: Yahoo Finance
– Bond Yields: Yahoo Finance’s explainer on bond yields