S&P 500 Breaks Below 5,000 at End of Jittery Week: Markets Wrap

(Bloomberg) — Stocks came under renewed pressure as big tech sold off, with traders also refraining from making riskier bets ahead of the weekend amid geopolitical uncertainties.

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Equities fell at end of a week that saw the S&P 500 dropping below 5,000 after a rally that sent the benchmark to all-time highs, spurring warnings for a consolidation. A drumbeat of hawkish Fedspeak and a flare-up in inflation pressures weighed heavily on sentiment, with investors trimming their bets on the keenly anticipated central bank pivot. While the latest tensions in the Middle East seemed contained, traders opted for a more cautious stance.

That being said, nothing can be taken for granted, and markets may remain on the edge, especially considering the looming weekend risk, according to Fawad Razaqzada at City Index and Forex.com. He added that inflation data continues to be a focal point for traders due to its potential influence on the Fed’s monetary policy.

“The stock market has been declining in recent weeks because rate cut expectations have dropped significantly — and investors are not surprisingly taking some profits after the strong market performance seen during the first quarter,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management.

The S&P 500 is on track for its sixth consecutive drop — the longest losing streak since October 2022. Netflix Inc. tumbled on a bearish forecast, while Apple Inc. headed for its lowest close in almost a year.

Treasury 10-year yields declined three basis points to 4.60% — almost erasing an earlier plunge of 14 basis points. The greenback wavered. Oil traded well off session highs.

The stock market is heading toward its third consecutive weekly decline — the longest losing run since September.

A Bank of America Corp. team led by Michael Hartnett wrote in a note that good economic news is now bad news for stocks, a shift in mindset from the first quarter when “good news = good.” Evidence of this is the $21.1 billion investors redeemed from stock funds in the two weeks through Wednesday, the most in a fortnight since December 2022, BofA said, citing data from EPFR Global.

Economists in the latest Bloomberg monthly survey reduced the probability of a recession in the next 12 months to 30% — the smallest odds since June 2022 and down from 35% last month.

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The upper boundary of the Fed’s target range for its benchmark interest rate, currently 5.5%, will fall only to 4% by the end of 2025, according to the survey. That’s a half percentage point higher than respondents expected just a month ago. The median projection shows just two quarter-point cuts this year.

Banco Santander SA Executive Chairman Ana Botin said the global economy is in a good state despite the geopolitical risks, with higher interest rates, strong employment and growth benefiting lenders in particular.

“We have a super-soft landing so far,” Botin said in an interview with Bloomberg TV from Washington. “So far so good.”

Corporate Highlights:

• Procter & Gamble Co., the maker of Pampers diapers and Dawn dish soap, reported quarterly sales that fell short of Wall Street estimates, overshadowing an improved profit outlook.

• SLB, the world’s biggest oil-services provider, said it is gearing up for a rebound in activity in the Northern Hemisphere during the second quarter after starting off the year with typical seasonal slowness.

• The US Federal Aviation Administration is investigating an incident where a passenger was apparently granted unauthorized access to the cockpit of a United Airlines Holdings Inc. charter flight traveling from Denver to Toronto.

• Nordstrom Inc.’s founding family has notified the board of its interest in taking the company private.

• Mondi Plc walked away from a possible bidding battle for UK packaging rival DS Smith Plc, a move that secures a deal for US bidder International Paper Co.

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.4% as of 12:01 p.m. New York time

• The Nasdaq 100 fell 1.3%

• The Dow Jones Industrial Average rose 0.5%

• The Stoxx Europe 600 was little changed

• The MSCI World index fell 0.5%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.2% to $1.0659

• The British pound fell 0.3% to $1.2401

• The Japanese yen was little changed at 154.56 per dollar

Cryptocurrencies

• Bitcoin rose 1.6% to $64,535.84

• Ether rose 0.6% to $3,087.43

Bonds

• The yield on 10-year Treasuries declined three basis points to 4.60%

• Germany’s 10-year yield was little changed at 2.50%

• Britain’s 10-year yield declined four basis points to 4.23%

Commodities

• West Texas Intermediate crude rose 0.4% to $83.10 a barrel

• Spot gold rose 0.7% to $2,394.73 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Farah Elbahrawy.

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