The bond market swung Friday as investors built bets that the Federal Reserve will hike interest rates soon to get inflation under control. US stocks, meanwhile, dipped but not by much after economists said a speech by Chairman Kevin Warsh helped strengthen faith that the Fed will do what's needed to bring inflation down, even if it causes pain for the economy in the short term.
- The Dow fell 9.45 points, or less than 0.1%, to 53,559.99, ending the week up 0.5%.
- The S&P 500 fell 19.23 points, or 0.2%, to 7,711.76, up 0.5% for the week.
- The Nasdaq fell 138.93 points, or 0.5%, to 26,402.42, ending the week 0.8% higher.
The reaction was stronger in the bond market following Warsh's first speech as chairman of the Fed at an economic symposium, the AP reports. Worries had grown that his tough talk about getting inflation down to the Fed's 2% target may be just that, unless the Fed backs it up with action. The Fed could hike short-term interest rates to curb inflation, but it could also feel deterred from doing so because that would slow the economy and hurt prices for investments. Warsh was adamant again on Friday that he wants to give financial markets fewer clues about what the Fed plans to do with rates for its two jobs of keeping inflation low and the job market strong. He has said he wants markets to react to what incoming data says about the economy and inflation rather than what the Fed says.
On Wall Street, Gap jumped 12.9% after the retailer reported stronger profit for the latest quarter than analysts expected. Marvell Technology fell 10.3% even though the chip company reported profit and revenue for the latest quarter that edged past analysts' expectations. CEO Matt Murphy said its business related to artificial intelligence technology is strong, and it raised its forecasts for upcoming revenue growth. But analysts said much of that optimism may have already been baked into Marvell's stock price, which came into the day with a surge of 184% for the year so far.
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