Nasdaq falls 2.24% while Fed signals no rush to cut rates; tech and pharma lead market losses
On Friday, stocks fell sharply as the postelection rally faltered and investors grew anxious about the direction of interest rates, according to CNBC.
The Dow Jones Industrial Average dropped 305.87 points, or 0.70 percent, to close at 43,444.99. The S&P 500 slipped 1.32 percent to 5,870.62, while the Nasdaq Composite plunged 2.24 percent to 18,680.12.
Pharmaceutical stocks weighed heavily on the Dow and the S&P 500, with Amgen falling 4.2 percent and Moderna tumbling 7.3 percent.
This followed President-elect Donald Trump’s announcement on Thursday of his intention to nominate vaccine sceptic Robert F. Kennedy Jr to lead the US Department of Health and Human Services.
The SPDR S&P Biotech ETF (XBI) dropped over 5 percent, marking its worst performance in a single week since 2020.
Technology stocks led losses in the S&P 500, with Nvidia, Meta Platforms, Alphabet, and Microsoft all declining significantly.
Tesla, however, rose 3 percent, standing out as a rare gainer among its “Magnificent Seven” peers, as it benefitted from its association with the ‘Trump Trade.’
Kristy Akullian, head of iShares investment strategy for the Americas at BlackRock, said the macroeconomic environment remains favourable for risk assets.
However, she cautioned about “micro volatility, particularly around potential policy shifts under a new administration.” Akullian added that the US equity market is expected to continue rising, though not “in a straight line.”
Federal Reserve Chair Jerome Powell added to investor uncertainty on Thursday by stating that the central bank was not “in a hurry” to lower interest rates. He attributed the delay to the economy’s strong growth, which allows policymakers to proceed cautiously.
Boston Fed President Susan Collins reinforced this caution, telling The Wall Street Journal that a December rate cut was not certain.
Economic data released on Friday showed retail sales increasing by 0.4 percent in October, slightly above economists’ forecast of 0.3 percent as reported by Dow Jones.
This followed an October US consumer inflation report that aligned with expectations. Despite these positive indicators, market momentum slowed following an initial postelection rally.
Earlier in the week, the major indexes had reached record highs.
However, the S&P 500 ended the week with a 2.1 percent decline, the Nasdaq Composite dropped 3.2 percent, and the Dow fell 1.2 percent, reflecting growing market concerns over policy shifts and interest rate direction.
