NEW YORK: US stocks were subdued on Friday as remarks from Federal Reserve officials clouded the outlook about when the central bank might start cutting interest rates.
While Fed Vice Chair for Supervision Michael Barr said on Friday he believes the central bank is at or near the peak of interest rate hikes, San Francisco Fed chief Mary Daly and Boston Fed President Susan Collins highlighted the need for more evidence of cooling inflation before easing policy measures.
The yield on the 10-year Treasury note briefly hit a two-month low earlier in the session, but was last steady at 4.453%.
Megacap stocks were mixed, with Microsoft and Alphabet falling 1.1% and 2.1%, respectively.
“Daly (said) Fed is grappling with uncertainty over outlook and policy lags,” said Thomas Hayes, chairman at Great Hill Capital LLC, adding the move lower in markets could partly be due to her comments.
“It would be normal to see some small consolidation before we push higher, but zooming out, managers are still pessimistic.”
Adding to the pressure, shares of Applied Materials lost 5.6% on reporting third-quarter results and on news that the semiconductor equipment maker was under investigation by the US Justice Department for allegedly violating export curbs to China.
While money markets have fully priced in that the Fed will hold rates steady at its December meeting, bets of an at least 25-basis-point rate cut in May stand at near 61% - lower than about 69% earlier in the day - according to the CME Group’s FedWatch tool.
The communication services index led declines among the 11 major S&P 500 sectors, while energy shares rose 2.0% as oil prices gained.
The small-cap Russell 2000 index climbed 1.0%, outperforming broader markets, and was eyeing weekly gains of nearly 5%.
Wall Street’s three main indexes were poised to gain nearly 2% for the week, also on course for their third straight week of gains, as multiple data points highlighted easing inflationary pressures.
The S&P 500 and the Dow are set for their longest weekly winning streaks since July, while the Nasdaq is on course for its longest streak of weekly gains since June.
At 12:01 p.m. ET, the Dow Jones Industrial Average was down 16.34 points, or 0.05%, at 34,929.13, the S&P 500 was down 0.43 points, or 0.01%, at 4,507.81, and the Nasdaq Composite was down 13.04 points, or 0.09%, at 14,100.63.
Among other movers, Gap surged 30.3%, as the apparel retailer posted better-than-expected third-quarter results due to improving sales at Old Navy and easing supply expenses.
ChargePoint Holdings slumped 35.6% as the electric-vehicle charging network provider lowered its estimates for third-quarter revenue and appointed Rick Wilmer as CEO.
Advancing issues outnumbered decliners by a 2.13-to-1 ratio on the NYSE and by a 1.77-to-1 ratio on the Nasdaq.
The S&P index recorded 14 new 52-week highs and one new low, while the Nasdaq recorded 39 new highs and 64 new lows.