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With A Strong Inflation Report, Stocks Close Lower On Friday; Key Averages Record Their Worst Week Since 2023: Constant Updates

As the Federal Reserve’s preferred inflation index revealed a stronger-than-expected increase in prices last month, U.S. stocks plunged Friday, capping their worst week of 2023.

The Dow Jones Industrial Average finished at 32,816.92, down 336.99 points, or 1.0%. The S&P 500

fell 1% to finish at 3,970.04. At 11,394.94, the Nasdaq Composite fell 1.7%. Early in the trading session, the Dow dropped as much as 510 points, or 1.54%.

The week finished with the major averages suffering their largest losses since 2023. The S&P 500 experienced its worst week since December 9 as it dropped 2.7%. This week saw an almost 3.0% decline on the Dow, its fourth consecutive losing week. The Nasdaq recorded its second consecutive week of declines, closing 3.3% lower.

After the business temporarily stopped shipping its 787 Dreamliners due to a fuselage problem, Boeing shares fell more than 4%. Microsoft and Home Depot stock

Both 2.2% and 0.9% of them fell.

The preferred inflation gauge used by the Fed, the core personal consumption expenditures price index, increased by 0.6% in January and 4.7% over the previous year, above economists’ predictions.

The data increased concerns that the Fed could need to maintain higher rates for a longer period of time to reduce inflationary pressures.

Chief financial strategist at Charles Schwab Liz Ann Sonders thinks there is more to the market’s decline than just the PCE figures.

According to Sonders, the market’s difficulties are not just due to rising inflation or worries that the Fed would have to maintain its restrictive monetary policy for an extended period of time.

“But there was simply a ton of speculative froth that sprang back up. And when emotion becomes a little too exuberant, the market has a tendency to move in a contrarian manner. So, I believe that sentiment may have had a role in the change. Not only these big forces,” she said.

The analyst thinks that an overall economic slowdown is necessary for inflation to decline.

“I believe that in order to bring about the flawless absence of inflation, something would have to give either generally in the economy or more specifically in the labor market,” Sonders said. I believe it to be a stretch without a corresponding impact on the labor market or economy.

Correction: The movement in Microsoft shares was misreported in a previous version of this article.

Source (CNBC)

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