Friday, October 13th, did not shake the confidence of investors in the U.S. stock market, which remained relatively stable as they awaited the upcoming Federal Reserve meeting on Wednesday.
The S&P 500 index barely moved, dropping just 0.16 point to settle at 6,051.09 by the close of Friday. Over the week, the index decreased by 0.6%, breaking a three-week streak of gains.
The Dow Jones Industrial Average experienced a slight decline of 0.2%, losing 86 points to finish at 43,828.06. This marked its seventh consecutive day of losses, the longest such streak since 2020, closing the week down by 1.8%. This was the most significant weekly drop since October and the second week in a row of declines.
Meanwhile, the Nasdaq Composite ended the day up by 0.12%, an increase of 23.88 points, closing at 19,926.72. Although it didn’t surpass its weekly high of 20,061.65, it still managed a 0.3% gain for the week.
The final Federal Reserve policy meeting of the year is set to conclude on Wednesday. Predictions are strong, with the CME Fed Watch tool indicating a 97% probability of a quarter-point reduction in the benchmark federal funds rate, bringing it to between 4.25% and 4.5%. However, rate predictions for the next year are less certain.
After receiving data this week that showed higher-than-anticipated inflation, markets are now expecting the Fed to pause rate changes in January, according to the CME Fed Watch tool, noted economists.
KPMG’s chief economist, Diane Swonk, mentioned in her analysis that the progress on inflation seems to have halted.
Assessing Inflation Trends
Consumer inflation rose again for the second consecutive month, marking a 2.7% increase in November, the sharpest rise since July. The core inflation rate, which excludes the more volatile food and energy sectors, remained steady at 3.3%. Both rates continue to exceed the Federal Reserve’s inflation target of 2%.
Additional concerns about inflation are emerging from the wholesale sector, where prices that companies pay increased by 3% last month, reaching a 3.5% rise when excluding food and energy costs—the highest since February 2023.
Increasing U.S. Treasury Yields
Yields on U.S. government debt have been climbing, marking their fifth consecutive session of increases and reaching the highest levels seen in recent weeks. This rise in yields is seen as a response to persistent inflation concerns, according to economists.
The benchmark 10-year yield escalated to over 4.4%, while the 2-year yield was at 4.247% as of Friday.
Dominance of Major Tech Firms
Despite worries about inflation, major tech companies such as Apple, Nvidia, Microsoft, Amazon, Meta (formerly Facebook), Alphabet (Google’s parent company), Broadcom, and Tesla continue to perform strongly.
This week, Alphabet, Amazon, Apple, Broadcom, and Tesla all reached record highs, even though their performances varied on Friday. Earlier in the week, Tesla achieved a record close, its first in over three years, continuing to rise amid CEO Elon Musk’s favorable interactions with President-elect Donald Trump. Since the presidential election, Tesla’s stock has surged approximately 65%.
Broadcom’s shares jumped over 24% on Friday alone, pushing the company’s market value to an astonishing one trillion dollars. This surge came after the company’s prediction of a significant increase in demand for AI-powered chips. CEO Hock Tan highlighted that AI could present a $60 billion to $90 billion revenue opportunity by 2027, potentially quadrupling the current market size. Broadcom also projected higher-than-expected revenue for the first quarter late Thursday.
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Passionate about analyzing economic markets, Alice M. Carter joined THE NORTHERN FORUM with a mission: to make financial concepts accessible to everyone. With over 10 years of experience in economic journalism, she specializes in global economic trends and US financial policies. She firmly believes that a better understanding of the economy is the key to a more informed future.
