Microsoft and Nvidia drove the S&P 500 lower on Friday, as investors fretted that inflation and a robust U.S. economy could put the Federal Reserve on track for additional interest rate hikes.
This week’s economic data pointed to higher inflation, a tight employment market, and resiliency in consumer spending, providing the Federal Reserve with additional space to hike interest rates.
Goldman Sachs and Bank of America now anticipate three additional rate increases this year, each by a quarter of a percentage point, up from their earlier projection of two rate increases.
Traders anticipate at least two additional rate hikes and forecast the Fed rate to peak at 5.3% in July as the central bank strives to calm the economy and decrease inflation.
The Nasdaq decreased 0.58 percent to 11,787.27 points, while the Dow Jones Industrial Average increased 0.39 percent to 33,826.67 points.
The S&P 500 dipped 0.3% for the week, while the Dow fell 0.1% and the Nasdaq gained 0.6%.
The S&P 500 has recovered approximately 6% so far in 2023, while the Nasdaq has rebounded approximately 13% after suffering significant losses in 2018.