© Reuters. FILE PHOTO: The U.S. Federal Reserve building is pictured in Washington, March 18, 2008. REUTERS/Jason Reed
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By Amruta Khandekar and Shristi Achar A
(Reuters) – Wall Street’s main indexes pared losses on Friday as weakness in megacap growth stocks was countered by gains in defensive sectors and energy firms, while investors looked forward to commentary by Federal Reserve Chair Jerome Powell next week.
Big technology and growth stocks such as Microsoft (NASDAQ:), Alphabet (NASDAQ:) and Tesla (NASDAQ:) slipped between 0.4% and 1.4% as investors grew concerned that interest rates could stay higher for longer.
The communication services and technology sectors housing major growth stocks fell 0.9% and 0.2% respectively.
Defensive plays such as consumer staples and utilities kept losses in check, with gains in firms such as retailer Walmart (NYSE:) helping keep the Dow Jones afloat.
Energy shares also rose 0.8% in another boost to the cyclicals-heavy Dow.
Among major movers of the day, Estee Lauder (NYSE:) lost 1.6% after the cosmetics maker forecast its annual net sales and profit below Street estimates.
With no major catalysts driving markets on Friday, focus has shifted to Fed Chair Powell’s speech at the Jackson Hole economic symposium next week as well as earnings from chip designer Nvidia (NASDAQ:).
Nvidia’s shares fell 1.4% on Friday but were still up 4.8% on the week.
The three main U.S. stock indexes are on track for sharp weekly losses as a spate of strong economic data caused investors to dial back expectations of rate cuts and drove up government bond yields.
“People are kind of waking up to the reality of no Fed rate cuts anytime soon, or even be able to really think about it happening,” said David Russell, global head of market strategy at TradeStation.
The yield on the 10-year Treasury note hit a ten-month high of 4.328% in the previous session and came within a whisker of its highest level since 2007. However, yields took a breather on Friday. [US/]
Traders see a nearly 91% chance of the Fed holding rates at current levels at its September meeting, according to the CME Group’s (NASDAQ:) FedWatch tool.
The tech-heavy Nasdaq is set to post the biggest weekly declines of the three major indices, down 3% so far.
The CBOE volatility index hit its highest in nearly three months, reflecting rising investor anxiety.
Risk sentiment has also been hurt in recent days by China’s sluggish economic recovery, with U.S.-listed shares of Chinese companies JD (NASDAQ:).Com and Alibaba (NYSE:) Group falling 5% and 2.9% respectively.
At 12:00 p.m. ET, the was up 55.07 points, or 0.16%, at 34,529.90, the S&P 500 was down 0.62 points, or 0.01%, at 4,369.74, and the was down 41.53 points, or 0.31%, at 13,275.40.
Hawaiian Electric shares jumped 10.1% after the utility firm said its goal was not to restructure the company.
Shares of cryptocurrency firms such as Coinbase (NASDAQ:) Global, Bitfarms and Riot Platforms Inc fell between 2% and 6.5% as bitcoin hit a fresh two-month low.
Advancing issues outnumbered decliners by a 1.40-to-1 ratio on the NYSE and by a 1.30-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and 17 new lows, while the Nasdaq recorded 16 new highs and 191 new lows.
