By Yasin Ebrahim
Investing.com -- The S&P 500 fell Friday, as data pointing to growing expectations for higher for longer inflation stoked investor jitters further about Federal Reserve rate hikes, pushing tech lower.
The S&P 500 fell 1.7%, the Dow Jones Industrial Average fell 0.9%, or 273 points, and the Nasdaq was down 2.2%.
The University of Michigan showed that the median expected year-ahead inflation rate rose to 5.1%, above the 4.7% seen in September.
A climb in inflation expectations, a closely watched metric by the Federal Reserve, comes just a day after data showed worse-than-feared inflation pressure.
“[W]e see drivers of disinflation on the horizon, most notably from a reversal in vehicle prices and a downshift in medical services,” Morgan Stanley said. “Risks are tilted towards more Fed tightening this year,” it added.
Treasury yields climbed, with the 10-year yield topping 4%, as the odds for a 0.75% Fed rate hike for November are now almost fully priced in.
Rising rates weighed heavy on growth sectors of the market including tech and consumer discretionary stocks.
Apple Inc (NASDAQ:AAPL), down 2%, led big tech lower, with Microsoft Corporation (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL) and Meta Platforms (NASDAQ:META) down more than 1%.
Major Wall Street banks, meanwhile, kicked off the quarterly earnings season in earnest, with mostly better-than-expected quarterly results.
JPMorgan Chase & Co (NYSE:JPM) rose more than 2% after reporting better-than-expected third-quarter results, as rising interest rates boosted net interest income offsetting weakness in investment banking revenue.
Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) also reported better-than-expected quarter results, but Morgan Stanley (NYSE:MS) bucked the trend as weaker performance in its investment banking business weighed on results.
Tesla (NASDAQ:TSLA) slumped more than 5% dragging consumer discretionary stocks lower after Wells Fargo cut its price target on the stock to $230 from $280 a share, citing worries about the impact of higher interest rates.
The price cut comes just a week ahead of the electric automaker’s third-quarter results slated for Oct. 19.
In deal news, Albertsons (NYSE:ACI) fell more than 8% on reports that Kroger (NYSE:KR) had agreed to purchase the Safeway owner in a deal valued at $24.6 billion, or $34.10 a share.