Markets: News  

By Christine Idzelis and William Watts

U.S. stocks closed mixed Friday, with the S&P 500 index eking out a gain after trading in bear-market territory earlier in the session, but all three major benchmarks booked another week of losses. The Dow Jones Industrial Average suffered an eighth straight weekly decline, marking its longest losing streak since April 1932, according to Dow Jones Market Data.

How did stocks trade?

On Thursday, the Dow industrials and S&P 500 booked their lowest closes since March 2021, according to Dow Jones Market Data.

For the week, the Dow fell 2.9%, the S&P 500 dropped 3.1% and the Nasdaq slid 3.8%, according to Dow Jones Market Data.

What drove markets?

Friday morning's bounce was short-lived, with all three major stock benchmarks showing sharp losses in afternoon trading before ending mixed at the closing bell.

The early rally provided an opportunity for traders to "lighten up on exposure" ahead of the weekend, selling amid "growing uncertainty and anxiety" about the direction of the economy as the Federal Reserve raises interest rates to fight high inflation, according to Wayne Wicker, chief investment officer at MissionSquare Retirement.

"Investor psychology is driving a lot of this," Wicker said in a phone interview Friday, referring to the selloff.

The S&P 500 slipped into bear-market territory Friday afternoon, but skirted finishing there. A bear market is defined by a fall of at least 20% from a recent peak.

Read:The S&P 500 narrowly averts a bear market. How long do they last once they arrive?

"Stocks remain on a shaky footing. Investors' list of worries grows ever larger," said Fawad Razaqzada, market analyst with City Index and Forex.com, in a note.

"Inflation. Interest-rate hikes. Low economic growth. Stagflation. Recession. Perhaps most importantly for stocks, the Fed is not there to provide cushion, like before," he wrote.

Stocks were initially buoyed after the People's Bank of China on Friday cut in its rate on five-year loans, aimed at shoring up weak housing sales by reducing mortgage costs. The country has been battling COVID outbreaks, with lockdowns in industrial hubs such as Shanghai blamed for weak factory and consumer activity data in April.

But analysts said the move also underlined concerns.

"Where the rest of the world is thinking of raising rates because of inflation, they're cutting rates in order to help the economy," said JJ Kinahan, chief market strategist for online brokerage firm tastytrade Inc., in a phone interview Friday. "I think that's a little bit of a warning sign," as U.S. companies that benefit from demand in China may be hurt by a slowing Chinese economy as well as supply-chain disruptions linked to the country's lockdowns, he said.

Consumer discretionary was the worst performing sector in the S&P 500 index Friday, falling 1.5%, according to FactSet data.

Friday was the final day of trading before the expiration of options tied to stocks and exchange-traded funds, which was seen potentially contributing to volatility during the session.

Major U.S. stock indexes booked another week of losses, with investors worried about whether soaring inflation can be brought under control by the Federal Reserve without derailing the economy.

The Dow saw its eighth straight weekly decline, marking its longest losing streak since April 1932, according to Dow Jones Market Data. The S&P 500 and Nasdaq Composite each fell for a seventh straight week, their longest losing stretch since March 2001.

Major retailers this week, such as Walmart WMTand Target TGTreported disappointing profits, against a backdrop of rising expenses and inflation.

Mark Hulbert: Here's the real reason the stock market is coming unglued -- and it isn't because of weak earnings

This past week has shown that the risk of economic downturn, fears that high inflation is cutting into corporate performance and rising borrowing costs remain the major worry for markets, particularly after Fed Chairman Jerome Powell said the central bank "won't hesitate" to lift rates beyond neutral to curb high inflation, according to Christian Stocker, lead equity sector strategist at UniCredit Bank in Munich.

"In this environment, investor sentiment is fickle and markets are likely to remain choppy to both sides until there is greater clarity in terms of recession, rates, and geopolitical risks," Stocker said.

The U.S. economic data calendar was empty for Friday, but next week will bring another round of inflation data and personal consumption expenditure prices.

Which companies were in focus?

How did other assets fare?

---Barbara Kollmeyer contributed to this report.

-Christine Idzelis

(END) Dow Jones Newswires

May 20, 2022 16:56 ET (20:56 GMT)

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