The S&P 500 ended lower on Friday as investors analyzed the implications of a U.S. inflation report for the Federal Reserve’s interest rate policy. The report showed that the personal consumption expenditures (PCE) price index, excluding food and energy, fell below 4% for the first time in over two years. This data revealed a “better than expected but still elevated inflation picture,” according to Eric Freedman, chief investment officer at U.S. Bank Asset Management. Additionally, all three major indexes closed the quarter with declines, marking their first quarterly declines in 2023.
Energy and financial sectors saw declines during the trading session, with energy slumping about 2% and financials declining 0.9%. Despite this, energy remained the biggest-gaining sector for the third quarter. The S&P 500 fell about 3.6% for the quarter, while the Dow lost 2.6% and the Nasdaq shed 4.1%. In September, the S&P 500 dropped 4.9%, the Dow fell 3.5%, and the Nasdaq declined 5.8%. Investors have become more attuned to the Federal Reserve’s long-term outlook for interest rates, resulting in increased market volatility as Treasury yields reached 16-year highs.
In addition to monitoring the stock market, investors were also keeping an eye on Washington, where hardline Republicans rejected a bill proposed to temporarily fund the government. This rejection made it likely that federal agencies would partially shut down beginning on Sunday. Furthermore, Nike shares surged 6.7% after the sportswear giant exceeded Wall Street estimates for first-quarter profit. Overall, the market ended the quarter on a weak note, with investors adjusting their portfolios based on the latest economic data and political developments.
