Wall Street Dips as Chipmakers and Auto Stocks Weigh

Introduction

Wall Street dipped and Treasury yields bounced on Friday as chipmakers and auto stocks outweighed a string of robust economic data, providing a downbeat ending to a generally upbeat week.

Chipmakers and Auto Stocks Weigh

All three major U.S. stock indexes were red after the starting bell, with the Philadelphia SE semiconductor index (.SOX) weighing heaviest on the tech-laden Nasdaq, while a strike launched by the United Auto Workers union (UAW) helped fuel the sell-off.

• The Philadelphia SE Semiconductor index (.SOX) fell in the wake of a Reuters report that Taiwan’s TSMC (2330.TW) asked major suppliers to delay delivery of high-end chipmaking equipment.
• A simultaneous strike by UAW workers at three strategic plants weighed on General Motors Co (GM.N), Ford Motor Co (F.N) and Chrysler parent Stellantis NV (STLAM.MI).

Robust Economic Data

On the economic front, data released on Friday was generally better than analysts expected, with industrial production breezing past consensus and University of Michigan consumer inflation expectations cooling.

This has cemented expectations that the Federal Reserve will leave its key interest rate unchanged at the conclusion of next week’s monetary policy meeting, and fueled hopes that the central bank’s tightening cycle might have run its course.

Market Performance

The Dow Jones Industrial Average (.DJI) fell 157.56 points, or 0.45%, to 34,749.55, the S&P 500 (.SPX) lost 37.64 points, or 0.84%, to 4,467.46 and the Nasdaq Composite (.IXIC) dropped 178.02 points, or 1.28%, to 13,748.04.

European stocks extended a rally sparked by the European Bank signaling an end to its rate-hiking cycle, boosted by better-than-expected Chinese economic data.

The pan-European STOXX 600 index (.STOXX) rose 0.33% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) shed 0.38%. Emerging market stocks rose 0.31%.

Treasury yields rose ahead of the Federal Reserve policy meeting next week as robust economic data stoked worries that restrictive interest rates will be in place for longer than expected.

Currency and Oil Prices

The dollar gave up some of its recent gains against a basket of world currencies, but remained on track for its ninth weekly gain. The dollar index (.DXY) fell 0.16%, with the euro up 0.2% to $1.0662.

Oil prices appeared set to notch their third consecutive weekly gain on supply tightness and optimism that the Chinese economy is gaining strength. U.S. crude rose 0.6% to $90.70 per barrel and Brent was last at $93.95, up 0.27% on the day.

Gold prices surged, bouncing off three-week lows in opposition to softness in the greenback. Spot gold added 1.0% to $1,928.70 an ounce.

Conclusion

Despite the dip in Wall Street and the concerns surrounding chipmakers and auto stocks, all three major U.S. stock indexes remained on a path to weekly gains. The market is closely watching the Federal Reserve’s upcoming monetary policy meeting for further guidance on interest rates.

Reporting by Stephen Culp; Additional reporting by Naomi Rovnick in London and Kevin Buckland in Tokyo Editing by Nick Zieminski

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