Technology stocks sold off in the face of higher interest rates this week and pulled the broader market lower, while sectors benefiting from higher interest rates and inflation held up better. For the week, the Dow Jones Industrial Average fell 1.78 percent, the S&P 500 Index 2.45 percent, the Russell 2000 Index 2.90 percent and the Nasdaq 4.92 percent.
Over the month, the Nasdaq was still up over 1 percent, while the S&P 500 gained 2.6 percent. The Dow increased 3.2 percent in February.
Airbnb (ABNB) was a corporate stand-out on Friday as its shares closed with a gain of 10 percent on the day. The company’s positive quarterly earnings for the close of 2020 were especially solid given the pressure on the travel industry throughout the COVID-19 pandemic.
Tesla (TSLA) shares took a tumble on Friday with a loss of 13.5 percent after the automaker announced that it would be shaving $1,000 off the price tags of its Model 3 and Y Long Range Dual Motor AWD. The company will temporarily pause the manufacturing and production of its Model 3 line due to a closure at its Fremont plant. Aside from the global shortage of chips used by Tesla in its vehicles, there are whispers of concern that demand may not be keeping pace with production of Tesla’s latest models.
Gold was down for the day with a loss of 1.92 percent after a recent upward trend. It dipped $34.00 to $1,738.00 per ounce. Silver followed suit for Friday with a decrease of 2.87 percent or $0.79 to close at $26.75 an ounce.
Friday’s crude oil prices still stayed above the $60 benchmark even with a 2.94 percent loss of $1.87 per barrel to $61.66.
Treasury bond yields spiked this week as selling in bonds accelerated. Yields rose across the curve and then shot up on Thursday afternoon, with the 10-year rising from 1.49 percent to 1.61 percent before quickly retreating. The spike was caused by a poor auction of 7-year Treasury bonds. Bonds recovered on Friday and iShares Barclays 20+ Year Treasury (TLT) finished the week down only 0.11 percent.
Consumer confidence improved in February. The Conference Board index rose to 91.3, up from 88.9 in January and beating expectations. The University of Michigan’s consumer sentiment survey also increased, matching the consensus forecast of a 76.8 reading.
New home sales were much stronger than predicted with an annualized sales pace of 923,000 in January, up from 885,000 in December. Analysts expected a decline to 850,000 homes.
Gross domestic product was revised to 4.1 percent growth, up 0.1 percentage points from the first estimate.
The Labor Department’s latest jobless claims report for the month showed a decrease from 841,000 last week to 730,000 through this week. In addition to being the lowest point of the jobless claim trend over the last 12 weeks, this month’s level quite handily beat the forecast of 838,000 first-time jobless claims.
Based on a report from the Commerce Department released on Friday, personal income for U.S. adults was up 10 percent on the month in January. The personal savings rate jumped 20.35 percent to reach its peak since May of last year. This accounted for the slightly lower than hoped for personal spending data on the month.
The 0.3 percent increase in the personal consumption expenditures price index beat the forecast 0.2 percent. The Federal Reserve benches the inflation rate against this index, which was only up 1.5 percent on the year, despite public confirmations from the Fed that the target inflation rate would be floated as high as 2 percent given the state of the economy.
The U.S. Dollar Index firmed on Friday after a European Central Bank official said the ECB should buy more bonds to halt rising interest rates. The U.S. Dollar Index increased 0.66 percent this week. The strong dollar weighed on emerging markets. iShares MSCI Emerging Markets (EEM) fell 6.57 percent on the week. iShares MSCI EAFE (EFA) saw a much smaller decline of 2.94 percent.
SPDR Energy (XLE) gained 4.27 percent on the week as crude oil climbed to near $63 per barrel midweek. SPDR Financial (XLF) declined 0.31 percent, SPDR Industrial (XLI) 0.41 percent and SPDR Communication Services (XLC) 1.26 percent. SPDR Technology (XLK) slipped 3.94 percent, SPDR Utilities (XLU) 4.97 percent and SPDR Consumer Discretionary (XLY) 4.99 percent.