U.S. stocks fell Friday morning as investors pointed to a continued risk-off tone, with tech stocks underperforming, bond yields higher, and a stronger dollar.
The S&P 500 (^GSPC) slumped by 0.6%, while the Dow Jones Industrial Average (^DJI) declined by 0.5%. The technology-heavy Nasdaq Composite (^IXIC) plunged by more than 1%. Early in the session, indexes were headed for their lowest close since January.
Tech stocks underperformed, while consumer discretionary and communication services were the worst sector performers.
The yield on the benchmark 10-year U.S. Treasury note rose to 3.88% Friday morning. The dollar index added 0.4% to trade at $104.32. Energy traded weaker, with U.S. benchmark WTI crude oil down about 3.5% to around $75.80 a barrel.
Stocks continued a sell-off from Thursday, when investors parsed through more hotter-than-expected economic data and hawkish Fedspeak.
On the macro front Friday, January’s import prices slumped for the seventh consecutive month, declining to 0.2%, as lower fuel prices more than offset higher nonfuel prices, the Labor Department said Friday.
Federal Reserve Bank of Richmond President Thomas Barkin continued a more hawkish tone from officials, saying the labor market remains “quite hot” and the “risk of doing too much outweighs the risk of doing too little.” Federal Reserve Governor Michelle Bowman added more to that sentiment by signaling that central bank will need to continue raising interest rates until inflation reaches its 2% goal.
Data out Thursday showed supplier prices rose at a monthly increase of 0.7%, hotter than the 0.4% expected by economists. Coupled with a hot consumer price reading for the month, recent data has driven worries that the central bank will maintain its hawkish stance, drive interest rates higher, and keep them there longer.
That narrative got a boost following two other Fed officials’ commentary on Thursday suggesting larger rate hikes this month amid sticky inflation.
“On the back of those comments, investors moved to price in a growing probability that the Fed might choose to move by more than 25bps at the next meeting in March,” Jim Reid and colleagues at Deutsche Bank wrote in an early morning note Friday morning.
Economists at Bank of America are forecasting a quarter-percentage point interest rate hike in March and May, and then a pause.
“Resurgent inflation and solid employment gains mean the risks to this outlook are too one-sided for our liking,” wrote the team at Bank of America. “March and May hikes appear very likely, and the Fed might have to hike further if inflation, job growth, and consumer demand refuse to soften.”
Meanwhile, there’s a new coined debate to the “hard” or “soft” landing scenario among investors — the “no landing” outcome. The scenario would result in the economy growing, while inflation refuses to be tamed. Either narrative would likely lead to a “landing” eventually, Yahoo Finance’s Alexandra Semenova reports.
In single stock moves, shares of DraftKings (DKNG) jumped 15% at the open, the highest since August after the online sports betting company reported fourth-quarter revenue of $855.1 million, above analysts expectations of $798.6 million. Active monthly payers climbed 31% to 2.6 million, higher than the 2.5 million forecasted.
Applied Materials (AMAT) stock rose after the semiconductor equipment vendor topped Wall Street’s expectations for the current period and its fiscal first quarter.
Intuitive Machines (LUNR) shares traded lower Friday as the company closed its SPAC merger with Inflection Point Acquisition this week. The company aims to be the first American private venture to touch down on the moon.
DoorDash (DASH) shares climbed after the company reported a 40% revenue jump to $1.8 billion compared to the prior year. Total orders also came in higher at 467 million, a 27% increase from the previous year. The delivery service company also announced a stock buyback program and projected an upbeat guidance for the current quarter.
Shares of Moderna (MRNA) sank Friday morning after the company’s flu vaccine study failed to reach one its goals.
Finally, Deere & Company (DE) climbed after the agricultural machinery giant beat expectations, with $11.4 billion in equipment sales, and earnings of $6.55 a share. The company is also projecting their net income of 2023 to be between $8.75 billion and $9.25 billion.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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