After showing a lack of direction early in the session, stocks have moved modestly lower over the course of the trading day on Friday. The major averages have pulled back a little more firmly into negative territory, although selling pressure remains somewhat subdued.
Currently, the major averages are off their lows of the session but still in the red. The Dow is down 87.21 points or 0.2 percent at 44,660.42, the Nasdaq is down 110.15 points or 0.6 percent at 19,681.84 and the S&P 500 is down 16.59 points or 0.3 percent at 6,066.98.
Stocks showed a notable move to the downside after the University of Michigan released a report showing consumer sentiment has unexpectedly deteriorated in February amid a surge by year-ahead inflation expectations.
The University of Michigan said its consumer sentiment index slumped to 67.8 in February after rising to 71.1 in January. Economists had expected the index to inch up to 72.0.
With the unexpected decrease, the consumer sentiment index dropped to its lowest level since hitting 66.4 in July 2024.
The deterioration by consumer sentiment came as year-ahead inflation expectations spiked to 4.3 percent in February from 3.3 percent in January, reaching the highest level since November 2023.
“Many consumers appear worried that high inflation will return within the next year,” said Surveys of Consumers Director Joanne Hsu.
She added, “This is only the fifth time in 14 years we have seen such a large one-month rise (one percentage point or more) in year-ahead inflation expectations.”
Traders are also digesting mixed U.S. jobs data, with a closely watched Labor Department showing weaker than expected job growth in January but an unexpected decrease by the unemployment rate.
The report said non-farm payroll employment rose by 143,000 jobs in January compared to economist estimates for an increase of about 170,000 jobs.
Meanwhile, employment in December and November surged by upwardly revised 307,000 jobs and 261,000 jobs, respectively, reflecting a net upward revision of 100,000 jobs.
The Labor Department also said the unemployment rate dipped to 4.0 percent in January from 4.1 percent in December. The unemployment rate was expected to remain unchanged.
“An unemployment rate at 4% is considered very low, giving the Fed reason to keep fed funds unchanged in the near term,” said Jeffrey Roach, Chief Economist for LPL Financial.
Sector News
Housing stocks are seeing considerable weakness amid a surge by treasury yields, dragging the Philadelphia Housing Sector Index down by 2.0 percent.
Significant weakness is also visible among retail stocks, as reflected by the 1.7 percent loss being posted by the Dow Jones U.S. Retail Index.
A steep drop by Amazon (AMZN) is weighing on the sector, with the online retail giant tumbling by 3.5 percent after reporting better than expected fourth quarter results but providing disappointing sales guidance for the current quarter.
On the other hand, networking stocks have shown a strong move to the upside, driving the NYSE Arca Networking Index up by 2.1 percent.
Airline stocks are also turning in a strong performance on the day, resulting in a 1.9 percent jump by the NYSE Arca Airline Index.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index slid by 0.7 percent, while China’s Shanghai Composite Index jumped by 1.0 percent.
Meanwhile, the major European markets have all moved modestly lower on the day. The German DAX Index, the French CAC 40 Index and the U.K.’s FTSE 100 Index are all down by 0.3 percent.
In the bond market, treasuries have shown a notable move to the downside. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.9 basis points at 4.507 percent.
Business News
U.S. Stocks Move To The Downside As Inflation Expectations Surge
2025-02-07 15:48:49
