Stocks tumbled on Friday as the post-election rally fizzled and investors fretted over the path of interest rates.
The Dow Jones Industrial Average lost 305.87 points, or 0.70%, to end at 43,444.99. The S&P 500 slipped 1.32% and closed at 5,870.62, while the Nasdaq Composite fell 2.24% to 18,680.12.
Declines in pharmaceutical stocks weighed on the 30-stock Dow and broader S&P 500, with Amgen down about 4.2% and Moderna off by 7.3%. President-elect Donald Trump said on Thursday that he planned to nominate vaccine skeptic Robert F. Kennedy Jr. to lead the Department of Health and Human Services. The SPDR S&P Biotech ETF (XBI) tumbled more than 5% and posted its worst week since 2020.
The information technology sector of the S&P 500 was the worst performing corner of the market, down more than 2% as Nvidia, MetaPlatforms, Alphabet and Microsoft tumbled.
Tesla was a rare exception among its Magnificent Seven peers, as shares of the electric vehicle giant and so-called “Trump Trade” were higher by 3%.
“While we think the macro backdrop still bodes well for risk assets, in the near term we should expect some micro volatility, particularly around potential policy shifts under a new administration,” said Kristy Akullian, head of iShares investment strategy, Americas, at BlackRock. “We expect the U.S. equity market to continue to move higher, but don’t expect that rise to happen in a straight line.”
Traders also grappled with recent comments from Federal Reserve Chairman Jerome Powell, who said on Thursday that the central bank wasn’t “in a hurry” to cut interest rates. He noted that the economy’s strong growth will permit policymakers to take their time as they decide the extent to which they reduce rates. Boston Fed President Susan Collins took the cautious sentiment further, telling The Wall Street Journal that a rate cut next month isn’t a certainty.
October retail sales data on Friday showed a 0.4% increase, slightly better than the 0.3% forecast from economists polled by Dow Jones. That finding follows an October consumer inflation report that was in line with economists’ projections.
The major averages had been coasting on a post-election rally since Trump’s victory at the polls — the three indexes touched fresh highs on Monday — but the upward momentum has been slowing. The S&P 500 posted a weekly loss of 2.1%, while the Nasdaq Composite slid about 3.2%. The 30-stock Dow fell 1.2% in the period.
