Wall St sinks on Powell rate-cut caution, Trump cabinet picks
Retail sales rise 0.4% in October, above forecasts
Indexes on track for weekly losses
Vaccine makers, packaged food cos fall after RFK Jr. appointment
Applied Materials down after Q1 rev forecast misses estimates
Indexes down: Dow 0.70%, S&P 500 1.32%, Nasdaq 2.24%
Updated with final prices, volume data
By Sinéad Carew and Lisa Pauline Mattackal
Nov 15 (Reuters) -Wall Street's main indexes closed lower on Friday, with the S&P 500 and Nasdaq notching their biggest one-day losses in two weeks, on concerns aboutslower interest-rate cuts and asinvestors reacted to cabinet picksby U.S. President-elect Donald Trump.
Federal Reserve Chair Jerome Powell on Thursday cited ongoing economic growth, a solid job market, and inflation above the U.S. central bank's2% target as reasons itcan afford to be careful with the pace and scope of future rate cuts.
Traders increased bets the Fed will not change rates at its December meeting, pricing in a roughly 42% chance, versus roughly 14% a month ago, according to the CME FedWatch tool. They also dialed back expectations for easing in 2025.
This view was reinforced by Friday's economic data showing U.S. retail sales rose slightly more than expected in October. Import prices also rebounded and data released on Wednesday and Thursday showed sticky inflation.
"In the last 48 hours we've had some pretty big changes, not just from the election but from economic data that was better than expected and Powell speaking about not having to be as aggressive on interest rate cuts," said Adam Rich, deputy chief investment officer for Vaughan Nelson in Houston.
"Market expectations for interest rate cuts have come down materially and also the market is readjusting after a pretty bullish reaction to the U.S. election."
Friday's sell-off ended a week in which market focus shifted from the U.S. election win by Trump, seen as a pro-business choice, to worries about the rate cut path and potential inflation risks under the next administration.
For the week, the S&P 500 fell 2.08% while the Nasdaq declined 3.15%, marking their biggest weekly losses in more than two months. The Dow fell 1.24% for the week.
"Volumes are elevated today. People are taking profits because this has been a good month. U.S. stocks have been doing well this month. But it's not blanket profit taking," said John Augustine, chief investment officer at Huntington National Bank, pointing to gains in the Utilities sector .SPLRCU. "This suggests more of a rotation."
Stocks of vaccine makers and packaged food companies also dipped after Trump said he would nominate Robert F Kennedy Jr, who has spread misinformation on vaccines and criticized ultra-processed foods, to head the Department of Health and Human Services.
The Dow Jones Industrial Average .DJI fell 305.87 points, or 0.70%, to 43,444.99, the S&P 500 .SPX lost 78.55 points, or 1.32%, to 5,870.62 and the Nasdaq Composite .IXIC dropped 427.53 points, or 2.24%, to 18,680.12.
The small-cap Russell 2000 index .RUT ended down 1.4%, its fourth consecutive session of losses.
Shares of defense firms and government contractors also fell, partly on concerns about Trump's picks earlier this week to head a new Department of Government Efficiency.
Among the S&P 500's 11 major industry sectors information technology .SPLRCT was the day's biggest loser, dropping 2.5%.
Also, the Philadelphia SE Semiconductor index .SOX fell 3.4% with Applied Materials AMAT.O tumbling 9.2% after the U.S. maker of chip-manufacturing equipment forecast first-quarter revenue below Wall Street estimates.
Shares in Moderna MRNA.O dropped 7.3% and Pfizer PFE.N fell 4.7%, weighing on healthcare .SPXHC, which closed down 1.88% after hitting its lowest since May in its fifth straight day of declines.
The Consumer staples index .SPLRCS, which finished off 0.8%, was also hurt by the nomination news. Among its biggest decliners, MonsterBeverage MNST.O fell7%, Lamb Weston LW.N lost6% and Keurig Dr Pepper KDP.O dropped5% to its lowest level since April.
Adding to Friday's volatility was the regular expiration of stock and index options, according to Vaughan Nelson's Rich.
Brent Kochuba, founder of financial insights company SpotGamma, said Friday's stock market weakness was partly due to investors being ill-prepared for a pullback.
CBOE's volatility index .VIX, also known as Wall Street's fear gauge, hit 17.55 earlier on Friday, the highest since Election Day on Nov. 5. However the index pared gains to close at 16.14.
Declining issues outnumbered advancers by a 1.89-to-1 ratio on the NYSE where there were 117 new highs and 108 new lows.
On the Nasdaq, 1,241 stocks rose and 3,115 fell as declining issues outnumbered advancers by a 2.51-to-1 ratio. The S&P 500 posted 13 new 52-week highs and 25 new lows while the Nasdaq Composite recorded 36 new highs and 285 new lows.
On U.S. exchanges 15.47 billion shares changed hands compared with the 13.94 billion average for the last 20 sessions.
Monthly change in US retail sales https://reut.rs/4i10zGa
Reporting by Sinéad Carew, Saqib Iqbal Ahmed in New York, Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Devika Syamnath and Richard Chang
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
