By DAMIAN J. TROIS, AP Business Writer
Shares fell slightly in morning trading on Wall Street on Friday, weighed down by further declines from chipmakers and other tech companies.
The S&P 500 fell 0.4% at 10:20 a.m. EST. The benchmark is in the red for the week after three consecutive weekly gains.
The Dow Jones Industrial Average rose 23 points, or 0.1%, to 34,607 and the Nasdaq fell 1.2%.
Tech stocks were the biggest drag on the market. The high valuations of the sector often exert outsized upward or downward pressure on the market as a whole. Apple fell 1.1% and Microsoft 1%.
Big tech stocks have been particularly sensitive to rising interest rates, which can make expensive growth stocks less attractive relative to their earnings.
Treasury yields have continued to rise as traders become accustomed to the Federal Reserve’s current policy pivot of fighting inflation instead of stimulating the economy. The 10-year Treasury yield rose to 2.69% from 2.65% on Thursday night, its highest level in three years.
The Fed has already announced a quarter-percentage-point hike in its benchmark interest rate and stands ready to take aggressive action to help temper the impact of inflation on the economy.
Minutes from the Fed’s meeting last month showed policymakers agreed to start reducing the stockpile of central bank Treasuries and mortgage-backed securities by about $95 billion a month. , from May. That’s more than some investors expected and nearly double the pace the last time the Fed shrunk its balance sheet.
Traders now expect a greater than 80% chance that the Fed will raise its overnight rate by half a percentage point at its next meeting in May. That’s double the usual amount and something the Fed hasn’t done since 2000.
Investors weighed the impact of the Fed’s monetary policy change as they also closely monitor the conflict in Ukraine. Energy prices have been volatile and food prices have risen since Russia invaded Ukraine. This adds to the lingering uncertainty about the duration of inflation and its depth.
Crude oil prices were relatively flat on Friday, but are still up about 30% for the year. Wheat prices have increased by about 35% and maize prices by 30%.
The conflict in Ukraine has prompted sanctions from the United States and much of Europe that have hurt the Russian economy. Yet Russia’s central bank has managed to stabilize key aspects of its economy with tight controls. It cuts a key interest rate and says more cuts could be on the way.
Wall Street is also monitoring China’s latest response to a surge in COVID-19 cases. People in Shanghai are facing severe restrictions on movement and activities due to the outbreak, which has some businesses worried.
ACM Research, which makes equipment used in the production of computer chips, warned investors of a drop in revenue due to limits on its operations. The stock fell 7.9%.
A rise in COVID-19 cases is also behind airline disruptions in Europe. Two major airlines, British Airways and easyJet, canceled around 100 flights on Wednesday. The industry is suffering from a staff shortage due to the virus.
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