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US stocks slump as wave of Fed and corporate earnings looms

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US stocks were mixed on Friday after the big tech stocks plunged in the opening session, with traders focusing on next week’s Federal Reserve policy meeting and a series of corporate earnings.

Wall Street’s benchmark S&P 500 index posted modest gains on Friday, led by defensive sectors such as healthcare, consumer staples and utilities. It rose by 0.7% across the five sessions, marking the second straight week of gains. The tech-heavy Nasdaq Composite Index fell 0.2% on the day and 0.6% for the week.

This move happened the next day technology Shares plummeted across the U.S. and Europe after industry giants Tesla and Netflix failed to impress investors with their earnings reports. Taiwan Semiconductor Manufacturing Company, the world’s largest contract chip maker, issued a warning on Thursday: Deepening semiconductor recessionalso weighed on sentiment.

“The bears could finally find solace in the market’s reaction to Tesla’s earnings and again to Netflix, but the numbers certainly weren’t disastrous,” said Quincy Crosby, chief global strategist at LPL Financial.

The tech sector will continue to be the focus of attention next week, with Alphabet, Amazon, Meta and Microsoft reporting quarterly results. A number of other large U.S. companies in various sectors are due to file reports next week to share insights on consumer demand and the economic outlook.

Separately, traders expect the Fed to end the current tightening phase next week by raising the benchmark Federal Funds rate by 0.25 percentage points to target rates between 5.25% and 5.5%.

Sensitive to monetary policy expectations, the two-year Treasury yield edged up to 4.85% in Friday afternoon trading. The benchmark 10-year Treasury yield fell 0.01 percentage point to 3.84%. Yields on bonds fall when prices rise.

The dollar, which tends to rise as investors hope for rate hikes, rose 0.3% against a basket of the country’s six currencies to its highest level in more than a week.

“The general view is that central banks are nearing the peak of the cycle in terms of tightening, while inflation looks more positive,” said Padraic Garvey, head of research for the Americas at ING.

The Bank of Japan and the European Central Bank will also hold interest rate meetings next week.

In Europe, the region-wide Stoxx 600 index recovered from early morning losses to close 0.3% higher. France’s Cac 40 rose 0.6%. Germany’s Dax index fell 0.2%, the only decline in Europe.

European energy stocks edged higher on higher oil prices and indices rose as investors expected Chinese officials to announce more measures to help the world’s second-largest economy next week.

International benchmark Brent crude settled at $81.07 a barrel, up 1.8%, while US benchmark West Texas Intermediate rose 1.9% to $77.07 a barrel.

“The measures announced so far have been overwhelming compared to expectations.” [ . . . ] More stimulus is likely in the coming weeks, which should provide short-term support to markets,” said Mohit Kumar, chief European financial economist at Jefferies in relation to China.

Asian stocks were mixed, with Hong Kong’s Hang Seng shares up 0.8% while China’s benchmark CSI fell 0.1%.

https://www.ft.com/content/b8424551-656f-45a1-9b6f-7566735fc19e US stocks slump as wave of Fed and corporate earnings looms

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