U.S. stocks end lower as tech weighs on S&P 500 ahead of Fed meeting

By Christine Idzelis and Joseph Adinolfi

Dow books third straight weekly decline

All three major U.S. equity indexes ended lower Friday, with the S&P 500 weighed down by tech stocks.

How stock indexes traded

The Dow Jones Industrial Average DJIA fell 190.89 points, or 0.5%, to close at 38,714.77.The S&P 500 SPX fell 33.39 points, or 0.6%, to finish at 5,117.09. The Nasdaq Composite COMP dropped 155.36 points, or 1%, to end at 15,973.17.

For the week, the Dow slipped less than 0.1%, the S&P 500 shed 0.1% and the tech-heavy Nasdaq fell 0.7%. The Dow fell for a third straight week, while the S&P 500 and Nasdaq each booked back-to-back weekly losses.

What drove markets

U.S. stocks ended lower Friday, as the S&P 500's information-technology sector fell sharply to book a weekly loss.

The market's fuel from the rise in shares of megacap companies known as "Big Tech" in recent months has started to fade, said Anthony Saglimbene, chief market strategist at Ameriprise, in a phone interview Friday.

The S&P 500's decline on Friday left it down 0.1% for the week. The index's biggest sector, technology, booked a weekly decline of 0.4%.

Some investors are worried that stickier inflation may be a headwind for potential interest-rate cuts from the Federal Reserve, which next week will release projections for possible rate decreases in 2024 after concluding its two-day policy meeting on March 20, said Saglimbene.

After readings earlier this week of the consumer-price index and producer-price index, there's "some doubt sown in investors' minds" that inflation is coming down enough for the Fed to start lowering rates at the pace the market anticipates, he said.

Traders in the federal-funds futures market are expecting the Fed will hold its benchmark rate steady at its policy meeting next week and again in May, with a 55.5% chance for a quarter-percentage-point cut in June to a target range of 5% to 5.25%, according to the CME FedWatch Tool, at last check.

Sinead Colton Grant, chief investment officer at BNY Mellon Wealth Management, said in a phone interview that she's still expecting three rate cuts by the Fed this year.

"We expected that inflation would be stickier on the way down," Grant said Friday. "If it gets pushed out a little bit from June to July, the key for us is that you would still expect three rate cuts," she said.

Meanwhile, several so-called Big Tech stocks - a group of megacap companies that span the tech, communication-services and consumer-discretionary sectors -fell Friday. For example, shares of Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN) Google parent Alphabet Inc. (GOOGL), Facebook parent Meta Platforms Inc. (META) and Apple Inc. (AAPL) all slid.

The S&P 500's tech, communication-services and consumer-discretionary sectors each closed sharply lower, down more than 1% in Friday's session.

In economic data released on Friday, the New York Fed's Empire State business-conditions index, a gauge of manufacturing activity in the state, fell 18.5 points in March to negative 20.9.

"Manufacturing activity has been in a slump," said Saglimbene.

U.S. industrial output inched higher in February following a decline in January. In other economic news Friday, a reading from a closely watched survey of consumer sentiment fell slightly in early March from a 32-month high.

Companies in focus

Adobe Inc. ADBE shares sank 13.7% after posting its quarterly results. The latest quarterly rebalancing of the S&P 500 will take effect Monday, meaning Friday was the last session for index-fund managers to add shares of Super Micro Computer Inc. SMCI and Deckers Outdoor Corp. DECK and sell shares of Whirlpool Corp. WHR and Zions Bancorp ZION.

Steve Goldstein contributed.

-Christine Idzelis -Joseph Adinolfi

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03-15-24 1658ET

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