Wall Street slips as households get more nervous WFTV

NEW YORK — (AP) Another seemingly listless week on Wall Street ended quietly on Wall Street on Friday, but deep concerns continue to lurk beneath the surface.

The S&P 500 fell 6.54 points, or 0.2%, to 4,124.08 to cap a sixth straight week it has moved less than 1%. The Dow Jones Industrial Average slipped 8.89, or less than 0.1%, to 33,300.62, while the Nasdaq composite lost 43.76, or 0.4%, to 12,284.74.

Despite the seemingly placid moves for the broader market, big swings swirled below the surface amid concerns over a possible recessionhigh inflation and the US government is heading towards what could be a catastrophic fault on his debt.

It’s not just Wall Street that’s affected. According to a preliminary survey by the University of Michigan, US consumer sentiment is collapsing. This is worrisome, as strong consumer spending has been one of the main forces preventing a recession as the economy slows.

Joanne Hsu, director of consumer surveys, pointed to the looming deadline of June 1, by which time the US government could run out of cash to pay bills unless Congress allows it to borrow more.

If policymakers fail to resolve the debt ceiling crisis, these dismal views on the economy will exacerbate the dire economic consequences of the default, she said in a statement.

President Joe Biden and congressional leaders postponed a meeting set for Friday on the debt crisis limit to next week. The delay was touted as a sign of positive exchanges, and talks at staff level are expected to continue throughout the weekend.

PacWest Bancorp stock is an area under heavy pressure this week looking to stabilize. It has come under intense scrutiny as Wall Street seeks the next possible US bank to fail after three high profile collapses since March.

PacWest fell 3% after falling from a morning gain. A day earlier, it had fallen sharply after disclosing a filing leak from the previous week. Its stock lost 21% last week.

Banks buckled under the weight of much higher interest rates, causing some customers to withdraw deposits in search of higher returns while driving down the prices of investments held by banks.

The rates are so high because the Federal Reserve took them hiking at a frantic pace to bring down inflation. Reports this week suggest that inflation continues to moderate from its peak last year, although it remains far too high for the comfort of households and regulators.

The hope on Wall Street is that the easing of inflation will convince the Fed not to raise rates again at its next meeting in June. This would provide respite both to the economy, which has slowed under the weight of higher rates, and to financial markets, where prices began to decline a long time ago.

A potential wild card arrived in Friday’s consumer sentiment report. He suggested that US households brace for inflation of 3.2% over the long term. That’s higher than last month’s reading of 3% and the highest level since 2011.

One of the Fed’s concerns is that if expectations of high inflation are confirmed, it could alter the behavior of buyers and other players in the economy, which would only make inflation worse.

Treasury yields rose in the bond market following the consumer sentiment report. The 10-year Treasury yield erased an earlier decline and climbed to 3.47% from 3.39% on Thursday night. It helps set the rates for mortgages and other large loans.

The two-year yield, which moves more in line with Fed expectations, fell from 3.90% to 3.99%.

News Corp. rose 8.5% after reporting a decline in earnings and revenue for the last quarter that was weaker than analysts expected.

This is the trend of this earnings release season. Reports were better than expected but still lower than a year earlier. S&P 500 companies are on track for a second consecutive quarter of declining earnings per share, known as an earnings recession.

First Solar jumped 26.5% after announcing the purchase of Evolar AB, a European company, to accelerate its development of high-efficiency tandem devices and other technologies.

On the losing side of Wall Street is Gen Digital, which fell 5.5% despite higher-than-expected earnings and revenue for the last quarter.

Several Big Tech stocks were also weak. These and other high-growth stocks are considered to be among the hardest hit by high interest rates. Amazon fell 1.7% and was the heaviest weight in the S&P 500.

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AP Business Writers Yuri Kageyama and Matt Ott contributed.

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