S&P 500 and Nasdaq Composite: Weekly Losses Loom Amid Fed Caution

Stocks Drift Lower, Major Indexes Poised for Weekly Losses

Stocks opened lower on Friday, signaling a muted end to the week as the postelection rally waned and Federal Reserve officials tempered expectations for further rate cuts. Weak corporate guidance from key players in the semiconductor and biotech sectors further pressured the market.

At 14:43 GMT, the blue chip Dow Jones Industrial Average is trading 43757.00, down 144.00 or -0.33%. The benchmark S&P 500 Index is at 5937.50, down 40.75 or -0.68% and the tech-heavy Nasdaq is trading 20749.25, down 262.50 or -1.25%.

Major Indexes and Key Drivers

The Dow Jones Industrial Average and S&P 500 are both on track for a weekly decline of 0.5% and 0.8%, respectively, while the Nasdaq Composite has shed 0.9%. This downturn erases some of the gains made in last week’s postelection rally, which had propelled the Dow to a record close above 44,000 on Monday. Investors are reassessing the sustainability of the advance amid cautious signals from the Federal Reserve.

Fed Chair Jerome Powell’s remarks on Thursday that there is no urgency to cut interest rates dampened market sentiment. The CME FedWatch Tool now assigns a 62% probability of a quarter-point rate cut in December, down from 82% before Powell’s comments. Supporting Powell’s stance, other Fed officials emphasized caution, citing concerns over persistent inflation.

Sector and Stock Highlights

Chip-equipment maker Applied Materials weighed on the technology sector, plunging over 9% after issuing weak revenue guidance for the current quarter despite exceeding earnings expectations. Tesla, another focal point in recent trading, declined 3% this week following a dramatic 29% rally last week driven by President-elect Donald Trump’s vocal support for CEO Elon Musk.

In contrast, Domino’s Pizza added nearly 2% after Berkshire Hathaway disclosed a new stake in the company, signaling confidence in its growth prospects. Alibaba shares gained over 3% after the Chinese e-commerce giant posted a 58% increase in net income, despite sales falling short of analyst expectations.

Macroeconomic Data Provides Mixed Signals

Economic data painted a mixed picture. Retail sales rose 0.4% in October, slightly beating expectations, but the core “control group” sales—used in GDP calculations—declined 0.1%, raising concerns about underlying consumer strength. Import prices climbed 0.3% last month, indicating lingering inflationary pressures, while the Empire State Manufacturing Index surged to 31.2, its highest level since December 2021.

Market Forecast

The immediate outlook for equities appears cautious as traders adjust to a more restrained Federal Reserve and evaluate corporate earnings against economic data. With reduced chances of a rate cut in December and ongoing inflation concerns, the market may face headwinds in the near term. However, optimism around resilient corporate earnings in certain sectors could provide selective opportunities for investors.

Traders should monitor upcoming Fed commentary and geopolitical developments, as well as next week’s housing and employment data, for further directional cues.