By Stephen Culp
NEW YORK (Reuters) – U.S. stocks fell, gold rose and European stocks suffered their biggest weekly loss of the year on Friday amid cooling economic data, a hawkish Federal Reserve and unfolding political crises in Europe.
The dollar gained ground against a basket of world currencies, while the euro saw its biggest decline against the dollar in two months from Friday to Friday.
“In terms of political unrest in Europe, we are finally starting to see some signs of contagion,” said Michael Green, chief strategist at Simplify Asset Management in Philadelphia.
“You see risk metrics getting better and people focusing on risky assets,” Green added. “And you don’t just see it in the stock market.”
The Dow Jones Industrial Average ended the session moderately lower, while the tech-heavy Nasdaq posted a nominal gain to hit its fifth straight all-time closing high.
The S&P 500 and Nasdaq advanced this week, with the latter posting its biggest weekly percentage gain since late April.
It looks like the Dow Jones will end the week lower than last Friday’s closing price.
The Fed ended its two-day monetary policy meeting without changing its key interest rate, as expected. But in its Summary of Economic Projections, the central bank cut the number of expected rate cuts this year from three to one, striking a more aggressive than expected tone.
The pain was eased by a series of economic indicators that showed inflation is cooling faster than analysts expected. This could convince the data-dependent Fed to reconsider the timing and number of cuts this year.
“(The Fed says) ‘We plan to make one cut,’ right? That was relatively disappointing for investors,” Green said. “At the same time, they recognized that inflation progress is encouraging and that the economy is weakening. Investors face exactly the same problem.”
Cleveland Fed President Loretta Mester called the recent data on cooling inflation “welcome,” in the wake of the week’s CPI and PPI reports, which were below analyst expectations, while Chicago Fed President , Austan Goolsbee, called the data a relief, but added that more progress has been made. is necessary.
The S&P 500 lost 57.94 points, or 0.15%, to 38,589.16, the S&P 500 lost 2.14 points, or 0.04%, to 5,431.6 and added 21.32 points, or 0. 12%, to 17,688.88.
European shares extended their broad sell-off as risk appetite was dampened by political uncertainties in France. The pan-European rate fell 2.4% this week, the biggest single-week percentage drop in 2024.
The pan-European STOXX 600 index lost 0.97% and the MSCI index of shares around the world lost 0.28%.
Emerging market stocks rose 0.05%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.16% lower, while rising 0.24%.
The dollar advanced while the euro was set for its biggest weekly decline against the dollar in two months, dragged down by political uncertainties in France.
The yen recovered after the Bank of Japan issued a surprisingly dovish policy update.
The rate rose 0.31%, while the euro fell 0.31% to $1.0702.
The Japanese yen weakened 0.16% against the greenback at 157.31 per dollar, while the British pound last traded at $1.2685, down 0.58% on the day.
U.S. Treasury yields continued their decline, falling to their lowest level since early April, as economic data provided the latest evidence of cooling inflation.
Benchmark 10-year bonds last rose 32/8 in price to yield 4.2112%, up from 4.24% late Thursday.
The 30-year bond last rose 31/32 in price to yield 4.3442%, up from 4.401% late Thursday.
Oil prices fell gradually but recorded their best week in four months on solid demand forecasts.
fell 0.22% to settle at $78.45 per barrel while settling at $82.62 per barrel, down 0.16% on the day.
Gold prices soared, posting their first weekly gain in four weeks.
“There is a lot of geopolitical uncertainty. Gold is the stable money, and many central banks have been stockpiling,” said Thomas Martin, senior portfolio manager at GLOBALT in Atlanta.
added 1.3% to $2,332.00 an ounce.
