The U.S. stock markets witnessed a deepening of losses, spurred by rising Treasury yields and weakness in semiconductor stocks, signaling the potential for the Nasdaq to register its first consecutive weekly declines in nearly five months.
The Dow Jones Industrial Average (DJIA) saw a decline of 61 points, or 0.2%, closing at 38,837. Similarly, the S&P 500 (SPX) dropped by 19 points, or 0.4%, to settle at 5,131.
Meanwhile, the Nasdaq Composite (COMP) experienced a 92-point, or 0.6%, decrease, ending the day at 16,033. FactSet data revealed that both the S&P 500 and Nasdaq were on track for weekly losses, with the former down by 0.1% and the latter by 0.6%. Nevertheless, the Dow maintained its positive trajectory for the week, up by 0.2%.
Amidst a backdrop of volatility, U.S. stocks witnessed a decline throughout the week, fueled in part by the ongoing rise in Treasury yields, which stirred unease among traders.
According to FactSet data, there was a slight uptick of 1 basis point in the yield on the 10-year Treasury note (BX: TMUBMUSD10Y) on Friday, following a significant increase of more than 10 basis points the previous day.
Market analysts attributed this unease in the market to disappointing inflation figures and concerns over stocks potentially surging to overbought levels too swiftly.
Victor Cossel, a senior macroeconomic strategy analyst at Seaport Research Partners, expressed during an interview with MarketWatch that recent inflation data, including the consumer price index (CPI), producer-price index (PPI), and import prices, have consistently exceeded expectations.
This has fueled growing apprehensions about stagflation, subsequently triggering a surge in long-term 10-year yields.
Last month, the import price index rose by 0.3%, in line with expectations from Wall Street analysts, while import prices excluding fuel saw a 0.2% increase.
Moreover, the New York Fed’s Empire State business-conditions index, which reflects manufacturing activity in the state, witnessed a steep decline of 18.5 points in March, dropping to negative 20.9.
Despite a modest increase in U.S. industrial output in February following a decline in January, a closely watched survey indicated a slight downturn in consumer sentiment in early March, retracting from a 32-month high.
On Friday, semiconductor stocks continued their downward trend, with companies like Nvidia Corp. (NVDA) and Advanced Micro Devices Inc. (AMD) contributing to the Nasdaq’s decline, which is heavily weighted towards tech stocks.
This decline in semiconductor stocks began last week after Broadcom Inc. (AVGO) and Marvell Technology Inc. (MRVL) issued disappointing earnings guidance despite reporting quarterly results that surpassed expectations.
Investors kept a close eye on crude oil prices, which saw a slight dip on Friday but stayed on track for a weekly gain of over 3%. U.S.-traded futures for West Texas Intermediate crude held steady above $80 a barrel.
Additionally, the focus was on the quarterly triple witching, marking the expiration of options tied to more than $5 trillion in stocks, exchange-traded funds, and equity indexes on Friday.
