Wall Street pulled back from its record Friday after a shaky day of trading, putting at least a temporary halt to its largest rally since Halloween.
The S&P 500 fell 0.7 percent from its all-time high set a day before. It initially climbed after mixed data on the U.S. job market bolstered hopes that eased interest rates will arrive later this year. It then swung to a loss after one of its most influential stocks, Nvidia, took a rare stumble following a jaw-dropping surge that critics called overdone.
Friday’s dip also sent the S&P 500 to a rare losing week, just its third in the last 19.
The weakness ofr Nvidia and other technology stocks dragged the Nasdaq composite to a market-leading loss of 1.2 percent. The Dow Jones Industrial Average, which has less of an emphasis on tech, held up better. It slipped 68 points, or 0.2 percent.
In the bond market, Treasury yields eased following the mixed data on the U.S. job market, which economists described as “all over the place.” The jobs report showed employers hired more workers last month than expected, but wages for workers rose by less than forecast. It also said job growth in January was not nearly as hot as earlier thought.
The job market and overall economy are in a delicate spot, where Wall Street wants them to continue growing, but not so much that they raise pressure on inflation.
The ultimate goal is for inflation to cool enough to convince the Federal Reserve to lower its main interest rate from its highest level since 2001. Such a move would release pressure on the financial system and the economy, which has so far remained out of a recession despite high interest rates.
“Big picture: these were helpful numbers for the Fed to gain confidence,” said Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management.
Following the report, traders’ bets remained on June as the likeliest starting point for the Fed’s rate cuts. The yield on the two-year Treasury, which follows expectations for the Fed, dipped to 4.48 percent from 4.51 percent late Thursday.
Wall Street loves lower interest rates because they encourage people and companies to borrow, which can strengthen the economy, and because they boost prices for stocks and other investments.
“Things are good, but not great, and they’re getting a touch worse,” Brian Jacobsen, chief economist at Annex Wealth Management, said about the jobs report. “The payroll gains are still fantastic, but we’re not as strong as we thought we were with the prior months’ numbers being revised down.”
Fed Chair Jerome Powell said a day earlier that the central bank is “not far” from cutting interest rates. He said it just needs additional data confirming that inflation is heading sustainably down to its 2 percent target.
In the meantime, the hope on Wall Street is that the remarkably resilient economy will drive growth in profits for companies.
Gap climbed 8.2 percent after the retailer reported stronger profits and revenue for the latest quarter than analysts expected. The retailer said sales returned to growth at both its Old Navy and Gap stores. The owner of Banana Republic and Athleta also gave a forecast for upcoming sales this year that was a touch higher than analysts’ estimates.
Gun maker Smith & Wesson Brands leaped 29.4 percent after likewise reporting stronger profits than expected for the latest quarter. It said its shipments grew faster than the overall firearms market.
But Nvidia was the main stock in the spotlight as it tumbled 5.5 percent for its worst day since May. It’s a rare blip for the stock that has shot up nearly 77 percent this year after more than tripling last year.
Because Nvidia has swelled into the third-largest U.S. stock, it carries much more weight on the S&P 500 than nearly every other. That buoyed Wall Street on the way up but leaves it vulnerable to pullbacks, particularly when critics say stocks caught up in the market’s frenzy around artificial intelligence have shot up too far, too fast.
Also on the losing end was Broadcom, which fell even though it reported stronger results than expected. It dropped 7 percent after giving a forecast for revenue this upcoming year that was a touch below analysts’ expectations.
Costco Wholesale sank 7.6 percent after its revenue for the latest quarter fell shy of forecasts.
All told, the S&P 500 fell 33.67 points to 5,123.69. The Dow dropped 68.66 to 38.722.69, and the Nasdaq slid 188.26 to 16,085.11.
In stock markets abroad, indexes were mixed in Europe and rose modestly across much of Asia. South Korea was a standout as the Kospi jumped 1.2 percent. (AP)
