The major averages fell for a second week. The Dow fell 4.2%. The S&P 500 and Nasdaq Composite lost about 4% and 4.4%, respectively. — Sarah Minn
S&P 500 erases August gains
The S&P 500 fell more than 3% on Friday to around 4,067. If that’s true, it would be the S&P 500’s lowest close since July 27’s 4,023.61. Market struggles over the past 10 days erased some solid rallies earlier in August. The index closed at 4,305.2 on August 16, but has since lost more than 5%. —Jesse Pound
Gold mining stocks plummet
In a bad day for markets overall, gold mining stocks are taking it on the chin. The VanEck Gold Miners ETF is down more than 5%, underperforming the major market averages. The fund is now down more than 38% from its recent peak in early April. Several individual mining stocks fell more than 7%, including Coeur Mining and IAMGOLD. Gold fell 1.22% for the day, marking a negative week for the precious metal. —Jesse Pound, Gina Francola
Energy is the big winner of the week
Energy is the only bright spot in the market this week, with the S&P 500’s energy sector rallying more than 5% so far this week. The sector, down on Friday amid a market selloff, is the only positive for the week. Higher oil prices helped lift stocks, with West Texas Intermediate crude up 1.7% this week. The biggest gainer is APA Corp, up 10.9% since Monday. CNBC Pro subscribers can read the full story here. — Michelle Fox
Here are some of the biggest moves on Friday
An Electronic Arts (EA) video game logo is displayed at the Electronic Entertainment Expo Lucy Nicholson | Reuters Here are three stocks making the biggest moves on Friday: See more of today’s biggest incentives here. —Sarah Min, Tanaya Macheel
The S&P 500’s biggest laggards
In afternoon trade, information technology, consumer discretionary and communications services were the biggest laggards in the S&P 500. The sectors fell 3.4%, 3.3% and 3.3%, respectively, as investors worried about possibility of higher interest rates. Meanwhile, energy and utilities were the best performing sectors in the broader market index. Sectors were down 0.6% and 1.1% each. — Sarah Minn
Powell’s hawkish tone is bad for stocks, Senyek says
Federal Reserve Chairman Jerome Powell’s speech on Friday was more hawkish than expected, weighing on stocks, according to Wolfe Research’s Chris Senyek. “A more hawkish tone was expected to come in his speech this morning,” Senjek wrote in a note Friday. That said, the market is interpreting his tone as even more aggressive than those expectations. After Powell’s remarks, both U.S. two-year Treasury yields and funds futures due in March 2023 rose about 0.5 percent and the stock tumbled. Going forward, shares are likely to continue trading lower according to Senyek. “This speech is likely to keep bearish pressure on equity markets, with the ‘Growth’ trade and sub-sectors and ‘long’ stocks taking the biggest hit…consider a trade reversal from mid-June,” he wrote. Senyek also reiterated his bearish stance on the stock. Going forward, he sees inflation readings and other economic data as the biggest market drivers through the end of the year. “We continue to believe that (1) core inflation will be a thorn in the Fed’s side and prove very persistent, and (2) the headwinds from Fed tightening are just beginning to show in economic readings and a demand- The driven recession will hit at the end of this year or early next year,” he said. —Carmen Reinick
NYSE retreats outpacing advancers in market sell-off
About six stocks on the New York Stock Exchange fell for every gainer on Friday, as the market sold off after Fed Chairman Jerome Powell’s much-anticipated speech. Across the S&P 500, just 15 names traded higher. — Fred Ebert
Dividend Stocks Could Be Winners After Deflation Act’s 1% Tax on Buybacks
With the 1% excise tax on share buybacks coming into effect next year, companies may speed up buybacks or start returning more money to investors through dividends. While the 1% levy shouldn’t have much of an impact on companies, taxes often influence corporate payout decisions, UBS analyst Keith Parker wrote in a note on Wednesday. According to an estimate by the Tax Policy Center, the tax could boost corporate dividend payments by 1.5 percent. To be sure, there are many things companies must consider when deciding whether to increase buybacks or issue a dividend, including the tax treatment shareholders will face. CNBC Pro subscribers can read the full story here. —Michelle Fox, Darla Mercado
There are many signs this is a soft landing, says Fundstrat’s Tom Lee
Markets have been priced into bearishness and are headed for a soft landing, according to Fundstrat’s Tom Lee.
“I think we’ve seen a lot of evidence that it turns out to be a soft landing,” Lee said Friday on CNBC’s “Halftime Report.”
The investor pointed to softness in durable goods, such as falling used car prices this year, as deflationary categories benefiting consumers. “This is not a recession, this is demand adjustment,” Lee said.
“I think there’s again, as you said, a lot of mixed currents, but the markets are priced into bearishness. I think a soft landing looks even more likely to me,” he said.
— Sarah Minn
Communications services sector, big tech names lead decline after Powell’s speech
The communications services sector, which includes Big Tech stocks, led the market selloff that followed Federal Reserve Chairman Jerome Powell’s speech. The S&P 500’s communications services sector was down about 2.5% as of 10:42 a.m. ET. The group’s tech giants led the decline, with Alphabet shares down nearly 4%. Meta lost 2.5% and Netflix fell 2%. Twitter lost 1.5%. Tech names are particularly sensitive to rising interest rates, which hurt the value of future stock earnings. Indeed, Powell gave a brief hawkish speech at the Fed’s annual economic symposium in Jackson Hole earlier this morning. He signaled that policymakers would adopt a restrictive stance “for some time” and warned against easing policy too soon. – Buy Darla
“Eight minutes. The market sits there and does nothing all week, just for eight minutes,” says Michael Schumacher of Wells Fargo.
“He hit the right notes,” Wells Fargo’s Michael Schumacher said, noting that the president’s speech has to be the shortest by a president at Jackson Hole. “Eight minutes. The market sits there and does nothing all week, just for eight minutes,” he said. — Sarah Minn, Patty Dom
Consumer sentiment data beats expectations
A better-than-expected reading for the University of Michigan consumer sentiment index may help offset Jerome Powell’s hawkish speech in Jackson Hole. The final reading for the August consumer sentiment index came in at 58.2. That was up from 51.5 in July and above the 55.3 expected by economists, according to Dow Jones. Inflation expectations for next year fell to 4.8% from 5.2% in July. This marks the lowest reading in eight months. — Jesse Pound
Powell reiterates that the Fed will continue to raise interest rates to fight inflation
Fed Chairman Jerome Powell reiterated that the central bank will continue to raise interest rates to reduce inflationary pressures. He warned, however, that there could be “some pain” as these measures take effect. “Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record strongly cautions against premature easing of policy,” Powell said in a speech at a symposium in Jackson Hole, Wyoming. — Fred Ebert, Jeff Cox
Bonds fall ahead of Powell’s speech, futures positioned for rate cut next year
Bond yields were mixed ahead of Federal Reserve Chairman Jerome Powell’s Jackson Hole speech at 10am. ET. The 10-year yield was higher at 3.05%. The 2-year yield, which is driven more by Fed policy, was slightly lower at 2.38%. Yields move inversely to price. Trading was light. “He’s sleeping, just waiting for the big event,” Wells Fargo’s Michael Schumacher said. “There’s no incentive right now. You could be very wrong. Most people think it won’t be an event, but why take the chance.” The chairman is expected to stress that the Fed will be relentless in using its policies to reduce inflation, although the futures market is pricing in a quarter-point rate cut for the second half of next year. He is also expected to stress that once the Fed raises interest rates to its benchmark rate, or the benchmark rate, it will likely keep them there. The Fed Funds futures market is pricing in some significant increases, including a 64 basis point increase in September, Schumacher notes. This pricing reflects the current market debate over whether the Fed will raise interest rates by another three-quarter points or slow by half a point at its September 20-21 meeting. “Right now, the market is pricing in 3.62% for the end of this year and the peak will be around 3.78% in March,” Schumacher said. The Fed has currently targeted the fed funds rate in a range of 2.25% to 2.50%. — Patty Dom
