US Shares Fall As Tech Shares Lag With Fed In Focus

US stocks exhibited mixed performance on Friday, with investors continuing to digest signals concerning the next monetary policy-related moves by the US central bank. The S&P 500 and Dow rose, shaking off earlier losses. The Nasdaq shares held in the red territory as technology stocks underperformed. As of Thursday’s close, the S&P 500 was still on track to post a weekly loss that would end a three-week winning streak, if levels hold through Friday’s close.

St. Louis Fed President James Bullard said Thursday that he wanted the Fed to get to between 3% and 3.25% on the Fed funds rate in the second half of this year, implying more aggressive interest rate hikes in the near-term. Bullard was the only rebel in the Fed’s March meeting, calling for a larger 50 basis point interest rate hike versus the 25-basis point hike that was ultimately decided.

Hawkish action from the Fed is meant to contain hot inflation, earlier remarks this week suggested other members of the central bank were also warming to the idea of tightening policy. Fed Governor Lael Brainard said that the FOMC was “prepared to take stronger action,” should inflation readings remain elevated and warrant such moves.

Other Fed officials offered a more measured approach to raising rates. In remarks Thursday, Atlanta Fed President Raphael Bostic said it would be “appropriate” to move the benchmark interest rate “closer to a neutral position,” suggesting a somewhat less hasty series of interest rate hikes.

Together, the confluence of commentary at least temporarily helped stocks pause their latest bout of volatility from earlier this week, and kept Treasury yields steadier after a steep march higher. The benchmark 10-year yield held around 2.6% for its highest level since 2019.

The market actually had to digest a lot of information in addition to a lot of hawkish information from the Fed over the last couple of days. Markets had been in a sell-off mode and finally got a chance to take a breather and realize that the equity markets especially have some actual positive things that are going on.