Wall Street closed a tumultuous week on a muted note on Friday as benchmark US Treasury yields topped 5%, and crude prices reversed earlier gains but remained above $100 per barrel, keeping inflation worries front and center. Investors approached the end of a week that was essentially split in two: first, restless anticipation in the days before the US Federal Reserve’s widely expected interest rate hike, and then the aftermath of that decision. A semiconductor rally helped US equities avoid a significant selloff.
Inflation concerns remained prominent as crude prices CLc1 settled above $100 per barrel, but they eased back from session highs after China, at the request of Saudi Arabia, asked Iran to limit attacks by Houthi rebels on Saudi oil infrastructure. Soaring oil prices have sent diesel prices to record levels, which is likely to translate into broader inflationary pressures affecting farming and shipping costs.
Central banks around the globe have embarked on a policy-tightening cycle to rein in inflation fueled by the Iran war. The Bank of Japan lifted interest rates to a 31-year high, following in the footsteps of the Federal Reserve and the European Central Bank, in an effort to control global inflation. The Bank of England was the outlier, holding rates firm but warning of future hikes. Financial markets are currently pricing in more than a 50% probability of another Fed rate hike at the central bank’s October meeting, up from 42.5% last Friday and 7.2% a month ago, according to CME’s FedWatch tool.
According to preliminary data, the S&P 500 .SPX .SPX gained 11.53 points, or 0.12%, to end at 7,647.19 points, while the Nasdaq Composite .IXIC .IXIC gained 92.72 points, or 0.35%, to 26,511.01. The Dow Jones Industrial Average .DJI .DJI fell 114.74 points, or 0.22%, to 51,663.30.
Berkshire Hathaway BRKa.N BRKa.N announced that Warren Buffett will step down as chairman to become chairman emeritus, nine months after handing the CEO position to Greg Abel. Xenon Pharmaceuticals XENE.O XENE.O tumbled after it temporarily paused enrollment in clinical studies testing its experimental drug for major depression and bipolar disorder, following reports of side effects.
Cryptocurrency-linked firms Coinbase COIN.O COIN.O , Strategy MSTR.O MSTR.O and Robinhood HOOD.O HOOD.O all surged as bitcoin prices BTC= jumped. The quarterly expiry of derivatives contracts tied to stocks, index options and futures, known as “triple witching,” likely contributed to heightened late-session volatility.
Reporting by Stephen Culp in New York; Additional reporting by Niket Nishant and Tharuniyaa Lakshmi in Bengaluru; Editing by Matthew Lewis.
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