Wall Street ended its second straight week of losses on Friday, giving back some of the gains that helped the stock market hit an all-time high earlier in the week.
The S&P 500 fell 0.6%, its third straight loss. The benchmark index hit a record high on Tuesday but fluctuated for much of the following days.
The Dow Jones Industrial Average fell 0.5%, while the Nasdaq Composite ended 1% lower.
Technology stocks were the biggest weights in the market. Software maker Adobe slumped 13.7% after giving investors weak sales guidance. Microsoft fell 2.1% and Broadcom lost 2.1%.
Shares in communications service providers also contributed to the market's decline. Meta Platforms 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 lost 155.36 points to 15,973.17.
The latest drop in stock markets came as traders reviewed multiple reports showing inflation remains stubborn despite a broad slowdown.
A closely watched report from the University of Michigan showed that consumer sentiment fell unexpectedly in March. Consumers are slightly less optimistic about the economy but continue to expect inflation to fall further, a possible sign that consumer prices are coming under control.
Inflation remains Wall Street's biggest concern as the Federal Reserve hopes to cut interest rates. The Fed raised interest rates significantly starting in 2022 to push inflation back to its 2% target. Inflation at the consumer level was as high as 9.1% in 2022.
A consumer price report this week showed inflation remained stubborn, rising to 3.2% in February from 3.1% in January. Another report on prices at the wholesale level also showed that inflation remains higher than Wall Street expected.
Other reports this week showed some weakening in the economy, boosting hopes of continued long-term easing in inflation.
A stock rally that began in October has all but stalled in March as investors try to determine the path forward for inflation, the Fed and the economy.
“You can look both ways and find a reason to be worried about stocks,” said Brian Nick, senior investment strategist at the Macro Institute.
Investors still need to worry about the delayed impact of the Fed's historic rate hikes on the economy, he said. The overall economy remains strong but is showing signs of slowing, which could mean a recession is still possible.
“Things are happening more slowly than investors are used to,” he said. “The policy delay that is exerting downward pressure is taking much longer than investors have priced in.”
Fed officials will provide their latest forecasts for where interest rates will head this year on Wednesday, following their final policy meeting. Traders are still leaning toward a rate cut in June, according to data from CME Group. The Fed's key interest rate remains at its highest level since 2001.
The central bank has kept the key interest rate stable since July 2023 and has previously signaled that it expects three rate cuts in 2024. Lower interest rates would ease pressure on the economy and financial system.
Bond yields rose slightly. The yield on the 10-year Treasury note rose to 4.31% from 4.29% late Thursday. The two-year Treasury yield rose to 4.73% from 4.69%.
Weak financial forecasts weighed on several companies. Cosmetics retailer Ulta Beauty fell 5.2% after giving investors disappointing profit guidance for the year. Electronics maker Jabil slumped 16.5% after cutting its sales forecast for the year.
Markets in Europe ended mixed, while markets in Asia were lower.
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` Business Reporters Elaine Kurtenbach, Matt Ott, Alex Veiga and ` Business Reporter Christopher Rugaber contributed to this report.
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