US stocks retreat as Fed aims to keep rates higher for longer


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US stocks retreated on Friday, concluding what has been a tough week for the market.

The Dow Jones Industrial Average slid 106.58 points, or 0.31 per cent, to close at 33,963.84. The S&P 500 shed 0.23 per cent to 4,320.06. The Nasdaq Composite slipped 0.09 per cent to 13,211.81.

Ford ended Friday up 1.9 per cent after a source told CNBC that the auto giant was making progress in negotiations with the striking United Auto Workers union. Stellantis also traded slightly higher, while General Motors finished lower.

In further company news, LG Chem and Huayou Group are partnering to enter the LFP cathode materials business, building facilities in Morocco and Indonesia. The Morocco plant will have an annual capacity of 50,000 metric tons, supplying LFP cathode materials primarily to North America. They plan to expand into LMFP cathode materials and vertically integrate the supply chain in Indonesia.

Friday’s slide marked the fourth straight day of losses for the three major indexes. The losing streak came as investors reacted to a signal from the Federal Reserve that it intended to keep interest rates higher for longer.

The S&P 500 and the technology-heavy Nasdaq Composite have dropped 2.9 per cent and 3.6 per cent this week, respectively. That marked the third straight negative week and worst weekly performance since March for each. The blue-chip Dow slid 1.9 per cent on the week.

Bond yields surged after the central bank forecasted one more rate hike for 2023. The benchmark 10-year Treasury yield popped to its highest level since 2007 last week. Meanwhile, the 2-year rate touched its highest level since 2006.

Concern also grew around a government shutdown, which could dent consumer confidence and slow down the economy further. House Republican leaders sent the chamber into recess on Thursday.

The US dollar has hit its highest levels against the euro, the pound and the yen since at least March after the Federal Reserve set out plans to cut interest rates — now at a 22-year high — much more slowly than economists had thought.

Turning to commodities, JPMorgan recommends focusing on the energy sector, believing it's time to turn bullish on the global energy complex. Despite oil prices surging by 30 per cent since June, energy equities have lagged behind. JPMorgan sees the potential for "upside risk," which could push oil prices to $150 a barrel in the near to medium term and $100 a barrel in the long term.

Overall, all sectors except for Energy and Tech closed lower on Friday. Consumer Discretionary was the worst performer.

Futures

The SPI futures are pointing to a 0.3 per cent fall.

Currency

One Australian dollar at 7:30 AM was buying 64.39 US cents.

Commodities

Gold gained 0.31 per cent. Silver added 0.66 per cent. Copper was flat. Oil gained 0.45 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE added 0.07 per cent, Frankfurt fell 0.09 per cent, and Paris closed 0.40 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei fell 0.52 per cent lower, Hong Kong’s Hang Seng gained 2.28 per cent while China’s Shanghai Composite closed 1.55 per cent higher.

The Australian sharemarket closed 0.05 per cent higher at 7,069.

Ex-dividends

Auckland International Airport (ASX:AIA) is paying 3.6969 cents unfranked
Atlas Arteria (ASX:ALX) is paying 20 cents unfranked
H&G High Conviction (ASX:HCF) is paying 2 cents fully franked
Sigma Health Ltd (ASX:SIG) is paying 0.5 cents fully franked

Dividends payable

Suncorp Group Ltd (ASX:SUN)
Step One Clothing Ltd (ASX:STP)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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