Wall Street on Friday ended a second straight losing week, recouping some of the gains that pushed the stock market to record highs earlier in the week.
The S&P 500 fell 0.6%, marking its third straight quarter of decline. The benchmark index hit a record high on Tuesday, but was mostly volatile in the days that followed.
The Dow Jones Industrial Average fell 0.5%, and the Nasdaq Composite Index ended down 1%.
Technology stocks accounted for the most weight in the market. Software maker Adobe fell 13.7% after giving investors a weak earnings outlook. Microsoft fell 2.1% and Broadcom fell 2.1%.
Telecommunications services stocks also contributed to the market decline. Metaplatforms fell 1.6% and Google parent Alphabet fell 1.3%.
Overall, the S&P 500 fell 33.39 points to 5,117.09. The Dow fell 190.89 points to 38,714.77 and the Nasdaq fell 155.36 points to 15,973.17.
The recent decline in stocks came as traders scrutinized several reports that showed inflation was generally slowing but remained stubborn.
Consumer sentiment unexpectedly declined in March, according to a report highlighted by the University of Michigan. Consumers have become slightly less optimistic about the economy, but expect inflation to fall further, a sign that consumer prices may be subdued.
Inflation remains a big concern on Wall Street as the Federal Reserve expects to start cutting interest rates. The Federal Reserve has sharply raised interest rates starting in 2022 to keep inflation at its 2% target. Consumer-level inflation in 2022 he reached 9.1%.
This week's report on consumer prices showed that inflation remained robust, rising from 3.1% in January to 3.2% in February. A separate report on wholesale-level prices also showed that inflation remained higher than Wall Street expected.
Other reports this week showed the economy is softening slightly, raising hopes that inflation will continue to ease for an extended period of time.
The stock rally that began in October essentially stalled in March as investors tried to figure out the future direction of inflation, the Federal Reserve and the economy.
“You can look in either direction and find reasons to be concerned about stocks,” said Brian Nick, senior investment strategist at Macro Institute.
He said investors still need to be concerned about the delayed impact on the economy from the Fed's historic interest rate hike. The overall economy remains strong, but there are signs of slowing, which could mean a recession remains a possibility.
“Things happen more slowly than investors have been processing,” he said. “The period that policy delays have been a drag is much longer than investors are pricing in.”
Fed officials are expected to release updated forecasts on Wednesday about where they see interest rates heading this year after their latest policy meeting. Traders are still leaning toward a rate cut in June, according to CME Group data. The Fed's key interest rate is at its highest level since 2001.
The central bank has kept its benchmark interest rate unchanged since July 2023 and has previously signaled that it expects three rate cuts in 2024. Lower interest rates will reduce pressure on the economy and financial system.
Bond yields rose slightly. The yield on the 10-year U.S. Treasury rose to 4.31% from 4.29% late Thursday. The two-year bond yield rose 4.73% from 4.69%.
Weak financial outlook weighed on several companies. Beauty products retailer Ulta Beauty fell 5.2% after giving investors a disappointing profit outlook for this year. Electronics maker Jabiru fell 16.5% after lowering its sales forecast for this year.
European markets ended mixed, while Asian markets fell.
Information for this article was contributed by Elaine Kurtenbach, Matt Ott, Alex Veiga and Christopher Rugaber of The Associated Press.
A person stands in front of an electronic securities board displaying Japan's Nikkei 225 index at a securities company in Tokyo, Thursday, February 22, 2024. Asian markets slumped on Friday, March 15, with Hong Kong's benchmark falling nearly 2% after mixed data on the US economy dashed hopes that interest rate easing was imminent. (AP Photo/Hoshiko Eugene, File)