Technology stocks sold this week on higher interest rates, dragging the broader market down, while sectors that benefited from higher interest rates and inflation performed better. During 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.
For the month, the Nasdaq was still up over 1 percent, while the S&P 500 was up 2.6 percent. The Dow rose 3.2 percent in February.
Airbnb (ABNB) was a standout company on Friday as its shares closed up 10 percent on the day. The company’s positive quarterly results at the end of 2020 were particularly solid given the pressure on the travel industry during the COVID-19 pandemic.
Tesla (TSLA) shares fell 13.5 percent on Friday after the automaker announced it would save $ 1,000 off the prices of its Model 3 and Y Long Range Dual Motor AWD. The company will temporarily cease manufacturing and production of its Model 3 line as the Fremont facility closes. Aside from the global shortage of chips Tesla uses in its vehicles, there are concerns that demand may not keep pace with production of Tesla’s latest models.
Gold fell 1.92 percent that day after a recent uptrend. It fell $ 34.00 to $ 1,738.00 an ounce. Silver followed on Friday, down 2.87 percent, or $ 0.79, to close at $ 26.75 an ounce.
Crude oil prices on Friday were still above the benchmark of $ 60 despite a 2.94 percent loss from $ 1.87 a barrel to $ 61.66.
Government bond yields rose this week as bond sales accelerated. Yields surged over the curve and rose on Thursday afternoon. The 10-year rate of return rose from 1.49 percent to 1.61 percent before quickly pulling back. The increase was caused by a poor auction of 7-year government bonds. Bonds rebounded on Friday and iShares Barclays 20+ Year Treasury (TLT) ended the week just 0.11 percent lower.
Consumer confidence improved in February. The Conference Board Index rose to 91.3 from 88.9 in January, beating expectations. The University of Michigan consumer sentiment poll also picked up, matching the consensus forecast of 76.8.
New home sales were much stronger than forecast, with annualized sales pace of 923,000 in January, up from 885,000 in December. Analysts expected a decline to 850,000 households.
The gross domestic product was revised to 4.1 percent growth, an increase of 0.1 percentage points compared to the first estimate.
The latest unemployment claims report from the Department of Labor for this month showed a decrease from 841,000 last week to 730,000 this week. This month’s level was not only the lowest point in the trend in jobless claims for the past 12 weeks, it also significantly exceeded the forecast of 838,000 first-time jobless claims.
According to a report by the Department of Commerce released on Friday, US adult personal income rose 10 percent from the previous month in January. The personal savings rate rose by 20.35 percent and reached its highest level since May last year. This was the reason the month’s personal spending data turned out to be a little lower than hoped.
The 0.3 percent increase in the price index for personal consumption expenditure exceeded the forecast by 0.2 percent. The Federal Reserve sets the inflation rate against this index, which is only 1.5 percent year-on-year, although the Fed has publicly confirmed that the target inflation rate would be up to 2 percent given the economic climate.
The US dollar index firmed on Friday after a European Central Bank official said the ECB should buy more bonds to halt rising interest rates. The US dollar index rose 0.66 percent this week. The strong dollar weighed on the emerging markets. iShares MSCI Emerging Markets (EEM) fell 6.57 percent weekly. iShares MSCI EAFE (EFA) saw a much smaller decrease of 2.94 percent.
SPDR Energy (XLE) was up 4.27 percent for the week as crude oil rose to nearly $ 63 a barrel during the week. SPDR Financial (XLF) was down 0.31 percent, SPDR Industrial (XLI) was down 0.41 percent, and SPDR Communication Services (XLC) was down 1.26 percent. The SPDR technology (XLK) lost 3.94 percent, the SPDR Utilities (XLU) by 4.97 percent and the SPDR Consumer Discretionary (XLY) by 4.99 percent.