U.S. stocks fell sharply on Friday, ending the week with their biggest losses of 2023. The decline came after the Federal Reserve’s preferred inflation gauge, the core personal consumption expenditures (PCE) price index, showed a stronger-than-expected increase in prices last month. The report added to worries that the Fed may have to keep rates higher for longer to quell inflationary pressures.
The Dow Jones Industrial Average fell by 336.99 points, or 1.0%, to end at 32,816.92. The S&P 500 dropped 1% to close at 3,970.04. The Nasdaq Composite slid 1.7% to end at 11,394.94. The Dow fell as much as 510 points, or 1.54%, earlier in the trading session.
The major averages also ended the week with significant losses. The S&P 500 was down 2.7%, marking its worst week since Dec. 9. The Dow fell almost 3.0% this week, its fourth straight losing week. The Nasdaq closed 3.3% lower, notching its second negative week in three.
Boeing shares slipped more than 4% after the company temporarily halted delivery of its 787 Dreamliners over a fuselage issue. Shares of Microsoft and Home Depot fell 2.2% and 0.9%, respectively.
According to Liz Ann Sonders, chief investment strategist at Charles Schwab, there may be more to the market’s downturn than just inflation concerns. “Another reason why the market is having trouble to some degree, I think, is not just about inflation being hotter or concerns that the Fed has to stay tighter for longer,” Sonders said on Friday.
Investors are likely to remain cautious in the coming weeks as they assess the impact of rising inflation on the economy and corporate earnings. The Fed has indicated that it is prepared to raise interest rates to keep inflation in check, but it remains to be seen how quickly and aggressively it will act.
Overall, the recent market turbulence serves as a reminder that investors should remain vigilant and stay diversified to manage risk in their portfolios. While it’s impossible to predict market movements with certainty, investors can take steps to mitigate their exposure to market volatility by diversifying across asset classes and maintaining a long-term perspective.