U.S. equities are experiencing a rebound, although they remain on track for a weekly decline, as investors grapple with renewed uncertainties regarding the Federal Reserve’s future interest rate decisions.
As of 10:50 ET (14:50 GMT), the Dow Jones Industrial Average was up by 86 points or 0.2%, while the S&P 500 gained 0.4%, and the NASDAQ Composite advanced by 0.4%.
Thursday saw a mixed close for the major Wall Street indices, with the Dow Jones Industrial Average ending nearly 60 points or 0.2% higher. In contrast, the tech-heavy Nasdaq Composite dipped 0.9%, and the broader S&P 500 fell by 0.3%.
Tech Shares Impacted by Rising Expectations of Fed Rate Hikes
Stronger-than-expected economic data, including last week’s initial jobless claims report, which showed fewer claims than anticipated, has fueled concerns that the Federal Reserve may maintain elevated interest rates for a more extended period than previously anticipated.
This development has disproportionately affected high-valuation technology stocks, with the Nasdaq Composite index declining by over 2% for the week, marking four consecutive days of losses.
While the Federal Reserve is still widely expected to keep rates unchanged at its upcoming meeting, the resilience of the U.S. economy suggests that future rate hikes remain a possibility.
Dallas Federal Reserve Bank President Lorie Logan emphasized on Thursday, “Forecasts are inherently uncertain. My base case, though, is that there is work left to do.”
Other Economic Data and Apple’s Impact
Wholesale inventories contracted by a more significant margin than anticipated, down 0.2% for July. Later today, the consumer credit reading for July will be released.
Apple (NASDAQ:AAPL) continues to be a focal point, with the tech giant facing headwinds from reports that China is restricting iPhone use by state employees. This move raises concerns about a potential slowdown in Apple’s iPhone sales, its primary revenue driver. China is also the third-largest contributor to Apple’s revenue, as reported in its second-quarter earnings.
Apple is set to unveil its new iPhone 15 lineup next week.
Kroger (NYSE:KR), a grocery chain, reported a loss for the recent quarter, as it agreed to pay $1.2 billion to settle claims related to the sale of opioid pills. Nevertheless, Kroger’s shares surged by more than 4.9%.
Weekly Gains for Crude Oil
Oil prices experienced gains on Friday, paring earlier losses despite lingering apprehensions about the health of China’s crucial economy and a stronger U.S. dollar.
The principal benchmarks are on track for weekly gains of approximately 2% due to the extension of voluntary supply cuts by top producers Saudi Arabia and Russia through the end of the year. Furthermore, data released late Thursday revealed that U.S. inventories had declined by a substantial 6.3 million barrels in the week ending September 1, marking the fourth consecutive weekly reduction.