Wall Street tumbles, Treasury yields gain as focus turns to Fed
By Stephen Culp
NEW YORK (Reuters) — U.S. stocks ended sharply lower and Treasury yields headed higher on Friday as plunging chip stocks and mixed economic data dampened investors' risk appetite, providing a downbeat ending to a tumultuous week.
All three major U.S. stock indexes closed deep in red territory, with chipmakers weighing on the tech-laden Nasdaq.
The S&P 500 and the Nasdaq reversed their weekly advances, while the blue-chip Dow ended the week nominally higher.
The Philadelphia SE Semiconductor index slid 3.0% in the wake of a Reuters report that Taiwan's TSMC asked major suppliers to delay delivery of high-end chipmaking equipment.
On the economic front, data released on Friday was mixed, with import prices jumping, industrial production beating expectations and University of Michigan consumer inflation expectations cooling.
Economic indicators this week have 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.
«There's a tug of war going on between those who think inflation and interest rates are going to come down and the Fed is going to start cutting rates next year, and those who believe that inflation is going to stay well above the Fed target for a while and therefore rates will stay higher for longer,» said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
Financial markets have priced in a 97% likelihood that the central bank will hold the Fed funds target rate at 5.25%-5.00% when it announces its decision next Wednesday, and a 68.5% likelihood of it doing the same at the conclusion
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