On Friday, benchmark equity indexes in the United States experienced a notable retreat as traders took stock of the latest economic data. This included a survey revealing a significant drop in consumer sentiment alongside a surge in inflation expectations. The Nasdaq Composite fell by 2.2% to close at 19,524.
Similarly, the S&P 500 and the Dow Jones Industrial Average both reported declines of 1.7%, landing at 6,013.1 and 43,428, respectively. Notably, the consumer discretionary and technology sectors were among those suffering the steepest declines, while the utilities sector remained largely unchanged.
In contrast, consumer staples emerged as the sole sector to gain ground during this trading session. Over the course of the week, both the Dow and the Nasdaq recorded declines of 2.5%, while the S&P 500 saw a reduction of 1.7%. These fluctuations have been indicative of a broader market sentiment impacted by fresh economic indicators. In economic updates, a report indicated that US consumer sentiment plummeted in February.
Concurrently, year-ahead inflation expectations reached their highest levels since November 2023, as drafted by a survey conducted by the University of Michigan. Surveys of Consumers Director, Joanne Hsu, noted that the report revealed "fears that tariff-induced price increases are imminent," underscoring concerns amongst consumers. Moreover, output growth within the private sector of the United States unexpectedly decelerated during February.
This slowing was further compounded by growing pessimism surrounding the potential impacts of tariffs and cuts to domestic spending. A report from S&P Global shed light on these developments. Real estate data revealed that existing home sales in the US had fallen more than anticipated in January, largely due to soaring mortgage rates and elevated home prices.
Lawrence Yun, Chief Economist at the National Association of Realtors, stated that "mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve." He further emphasized that when viewed alongside high home prices, housing affordability stands as a substantial hurdle for many potential buyers. On the bond markets, the 10-year US Treasury yield dipped by 7.2 basis points to finish at 4.43%, while the two-year rate slumped 6.6 basis points, ultimately closing at 4.2%.
These yield movements are pivotal indicators reflecting market sentiment and investor expectations. In individual company news, shares of Akamai Technologies experienced a startling decline of nearly 22%, marking the steepest drop within the S&P 500. This downturn came after the company issued disappointing quarterly and full-year financial projections late Thursday.
On the other hand, UnitedHealth Group contested claims made by The Wall Street Journal, which suggested that the US Department of Justice had initiated an investigation into the health insurer's Medicare billing practices. Following these updates, shares of UnitedHealth Group fell by 7.2%, making it the worst performer in the Dow index. Conversely, MercadoLibre stood out as the top gainer on the Nasdaq, witnessing a 7.1% increase following their presentation of a strong quarterly performance late Thursday. Further illustrating market sentiment, West Texas Intermediate crude oil prices dipped by 3.1%, pricing at $70.22 per barrel, as the market headed for a weekly loss.
Analysts at Saxo Bank emphasized that the market is grappling with "an increasingly erratic message flow from Washington (DC)" while awaiting decisions from the Organization of the Petroleum Exporting Countries (OPEC) regarding production output. In commodity trading, gold prices fell by 0.3%, landing at $2,948.20 per troy ounce, while silver saw a loss of 1.7%, with prices settling at $32.91 per ounce..