The S&P 500 closed barely higher on Friday, supported by cooling inflation data, but the Nasdaq ended lower as heavyweight technology and communications services shares lost ground on nagging fears of disruption by artificial intelligence. The S&P 500, the Nasdaq and the Dow all declined for the week with technology stocks on a roller-coaster ride due to uncertainty about the extent to which profits could be disrupted due to AI competition and the hefty spending needed to support the technology. Get a daily digest of breaking business news straight to your inbox with the Reuters Business newsletter. Sign up here. Advertisement · Scroll to continue
Equities had started the session strong after data showed U.S. consumer prices increased less than expected in January. This prompted traders to slightly raise the chance of a 25 basis point interest-rate cut in June to 52.3% from 48.9%, according to the CME Group's FedWatch, opens new tab tool. But heavyweight technology (.SPLRCT), opens new tab and communications services (.SPLRCL), opens new tab ended the session lower as investors were jittery ahead of Monday's U.S. holiday for Presidents Day. "Large cap tech stocks continue to be an anchor on the market and any whiff of optimism continues to get rejected," said Michael James, managing director, at Rosenblatt Securities, Los Angeles. Advertisement · Scroll to continue
"We've been on wobbly legs a couple of weeks now and with the three-day weekend approaching, it's not surprising to roll over into the end of the day." The Dow Jones Industrial Average (.DJI), opens new tab rose 48.95 points, or 0.10%, to 49,500.93, the S&P 500 (.SPX), opens new tab gained 3.41 points, or 0.05%, to 6,836.17 and the Nasdaq Composite (.IXIC), opens new tab lost 50.48 points, or 0.22%, to 22,546.67. For the week, the S&P 500 fell 1.39%, the Nasdaq declined 2.1%, and the Dow fell 1.23% for their biggest weekly losses since November. Equity markets have pulled back from record levels recently as AI fears fueled worries in sectors spanning from software and insurance to trucking companies. However, the S&P 500 software and services index (.SPLRCIS), opens new tab closed up 0.9% on Friday while the S&P 500 tech sector (.SPLRCT), opens new tab fell 0.5%. Despite improving inflation trends, Phil Orlando, chief market strategist at Federated Hermes, predicted more choppy trading ahead as investors deal with the looming U.S. midterm elections in November and the expected replacement of Fed Chair Jerome Powell by Kevin Warsh in May.
