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US stocks retreated on Friday, closing out a choppy week as Nvidia’s incredible rally took a breather. The S&P 500 lost 0.65% to 5,123.69, while the Nasdaq Composite slipped 1.16% to 16,085.11.
All three major indexes finished the week lower, with the broad S&P 500 pulling back by 0.26%, the blue-chip Dow Jones and tech-heavy Nasdaq falling 0.93% and 1.17%, respectively. This decline marked the worst week for the 30-stock Dow since October.
An earlier rally in Nvidia lost momentum, with the artificial intelligence finishing down more than 5% in its worst session since late May. Despite that breather, Nvidia shares still finished up more than 6% on the week, contributing more than $1 trillion to the stock’s market cap in just the new year alone.
Apple rose 1% in Friday trading, snapping its longest losing streak since early 2022 at seven days but still down nearly 5% on the week, making it the worst performer in the 30-stock Dow.
The February jobs data released Friday morning offered conflicting signals as to when it will be safe for the Fed to start cutting interest rates. On one hand, the number of jobs added last month was much more than expected, coming in at 275,000 compared with an estimate of 198,000 from economists polled by Dow Jones and 200,000 consensus elsewhere.
However, the unemployment rate unexpectedly ticked higher to 3.9% and wage growth was lighter than feared, offering dismal facts encountering hope that inflation has cooled enough to soothe the Fed. Data on January jobs growth was also revised lower.
In summary, the data skews positive and should provide sufficient confidence to the Fed that a modest adjustment to interest rates is appropriate.
The Dow saw its worst weekly performance since October, with the blue-chip index down about 0.9% on the week.
It is worth noting that President Biden’s call for more taxes on high-income Americans during his State of the Union address, on Thursday night, doesn’t impact investor sentiment.
Russell 2000 futures pushed higher after US jobs data revived market rate cut bets. Small-cap companies are more sensitive to rates, which dictate lending and labour costs. Chip makers are up about 1.25% this morning via the VanEck Semiconductor ETF, with guidance from Broadcom highlighting faster-than-expected spending on artificial intelligence for the year.
