Stocks were trading mixed Friday following the S&P 500‘s 1.6% drop on Thursday, its worst day since March, as investors reacted to signals from the Federal Reserve that it could keep interest rates higher for longer. Bill Ackman, CEO of Pershing Square Capital Management, anticipates that long-term interest rates will keep rising, especially for the 30-year bond currently at 4.55%. His forecast is driven by the U.S. economy's strong performance, significant infrastructure spending, and a growing national debt.
Here are the stocks making moves on Friday:
- Ford shares were among the top performers in the S&P 500. This surge occurred after The United Auto Workers announced considerable advancements in their discussions with the automotive company and planned strikes at 38 General Motor and Stellantis locations.
- Eight of the 11 S&P sectors turned negative, with Consumer Discretionary and Financials sectors experiencing the most significant losses. The sectors that gained were Energy, Technology, and Communication Services.
- The S&P 500, Nasdaq, and Dow were down by 2.77%, 3.45%, and 1.82% respectively on a weekly basis.
- Market confidence was further shaken by the Fed's latest forecast and comments from Chairman Jerome Powell. Following these, there was a significant sell-off with major averages dropping notably.
- Treasury yields responded to the Federal Reserve's decisions, with the 2-year yield reaching a level unseen since 2006 and the 10-year yield surpassing 4.5%.
- The rise in the U.S. 10-year Treasury yield to over 4.5% marked its first occurrence since 2007, driven mainly by the expectation of central banks maintaining restrictive policy rates for an extended duration.
- U.S. jobless claims reached their lowest since January, further indicating the strength of the U.S. job market.
- Recent economic data and comments from Federal Reserve representatives were digested by traders. For instance, the U.S. PMI composite flash reading for September dipped to a seven-month low. Boston Fed's Susan Collins mentioned that more interest rate hikes were possible, and Michelle Bowman from the Fed opined that interest rates might need further adjustment due to persistently high inflation. Lastly, San Francisco Fed's Mary Daly stated that the Fed had maintained interest rates to gather more data and assess if further tightening was necessary.
