S&P 500’s Rollercoaster: Weekly Losses Continue Amid Auto Strike

Dow Maintains Its Weekly Gains Despite Friday’s Stock Market Downturn

On Friday, the U.S. stock market closed with losses as investors grew concerned about rising inflationary pressures ahead of the Federal Reserve’s upcoming meeting, along with an ongoing auto workers’ strike adding to market unease.

Here’s a summary of how the key stock indices performed:

• The Dow Jones Industrial Average (DJIA) saw a decline of 288.87 points, representing a 0.8% drop, closing at 34,618.24.
• The S&P 500 (SPX) experienced a 54.78 point drop, equivalent to a 1.2% decrease, ending the day at 4,450.32.
• The Nasdaq Composite (COMP) fell by 217.72 points, or 1.6%, concluding at 13,708.33.

For the week, the Dow managed to secure a modest 0.1% gain, while the S&P 500 slipped 0.2%, and the tech-focused Nasdaq registered a 0.4% decline. These numbers, according to Dow Jones Market Data, meant both the S&P 500 and Nasdaq faced consecutive weekly losses.

Factors Influencing the Market

Persistent inflation concerns continued to put pressure on stocks, with Treasury yields inching higher. Additionally, there was apprehension among investors regarding the ongoing auto workers’ strike.

Marco Pirondini, Head of Equities for Amundi U.S., commented on the challenging inflation scenario, noting, “The market is starting to recognize that the Fed will maintain high-interest rates for an extended period.”

The Federal Reserve, in its efforts to cool down the economy and combat escalating living costs in the U.S., is slated to hold a policy meeting in the upcoming week. Traders anticipate the central bank will maintain its benchmark rate within the current target range of 5.25% to 5.5%.

Pirondini emphasized that the U.S. economy remains “fairly strong,” making it difficult to rein in inflation. Fresh economic data for the day outperformed expectations, with U.S. industrial output and manufacturing activity in New York state both exceeding forecasts.

The Fed reported a 0.4% increase in industrial production for August, surpassing economists’ expectations of a 0.2% gain. Simultaneously, the New York Fed revealed positive data from its Empire State manufacturing survey, with the business conditions index reaching 1.9 this month, contrary to the expected negative reading.

Another focal point for investors was the United Auto Workers’ strike against the Big Three U.S. automakers: Ford Motor Co. (F), General Motors Co. (GM), and Chrysler owner Stellantis (STLA). Although initially seen as a minor market event, analysts expressed concern that a protracted strike could drive up car prices, exacerbating inflation pressures and affecting the broader U.S. economy.

A survey from the University of Michigan indicated declining consumer sentiment for the second consecutive month in September. The survey also revealed that Americans expect inflation to average 3.1% in the next year, down from the previous month’s projection of 3.5% and marking the lowest reading in two and a half years.

Furthermore, rising Treasury yields weighed on U.S. equities in recent weeks, with the information technology sector experiencing a significant 2% decline, according to FactSet data.

In terms of the weekly performance, the S&P 500 remained relatively steady, with only a minor 0.2% decrease.

With the majority of companies having already reported their second-quarter earnings, the market lacked significant catalysts during the week. Randy Frederick, Managing Director of Trading and Derivatives at Charles Schwab, noted that the U.S. economy continued to demonstrate stability, contributing to the current sideways market movement.

Notable Company Movements:

• General Motors Co. (GM) shares gained 0.9%, while Ford Motor Co. (F) experienced a marginal 0.1% dip, and Stellantis NV (STLA) saw a 1.9% increase as nearly 13,000 United Auto Workers initiated a strike.
• ARM Holdings PLC’s (ARM) American depositary receipts declined by 4.5% after an impressive market debut the previous day.
• Adobe Inc. (ADBE) shares dropped 4.2% as the software company announced revenue forecasts in line with Wall Street estimates.
• Planet Fitness Inc. (PLNT) faced a significant drop of 15.9% following the departure of CEO Chris Rondeau.
• Walt Disney Co. (DIS) stock rose 1.3% as the company remained undecided on the future of ABC and other broadcast channels, which CEO Bob Iger had suggested could be sold.