But critics say many of those areas also tend to be among the last to feel the effects of higher interest rates and may still crack. And the Fed has already raised rates by the most aggressive pace in decades.
“Fed tightening always ‘breaks’ something,” investment strategist Michael Hartnett wrote in a BofA Global Research report.
Complicating things are all the revisions and changes in methodology embedded in recent data reports on the economy, which may be clouding the signal they give, said Michael Green, chief strategist at Simplify Asset Management.
He’s also worried about how much of the high inflation sweeping the economy is the result of reduced competition as companies across industries consolidated, something that rate hikes by themselves can’t solve.
“We’ve created a feedback loop where the Fed will hike interest rates until they break something,” Green said. “Then the question is: How do they respond?”
Big technology and other high-growth companies have been taking the brunt of worries about the Fed because they’re seen as some of the most vulnerable to higher rates. Their stocks soared in earlier years in part because of record-low rates.
Microsoft fell 1.6 per cent and Nvidia lost 2.8 per cent for some of the heaviest weights on the S&P 500.
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Energy stocks also tumbled as the price of oil weakened. Exxon Mobil fell 3.8 per cent.
On the winning side was Deere, which gained 7.5 per cent after reporting stronger profit for its latest quarter than analysts expected.
Altogether, the S&P 500 fell 11.32 points to 4,079.09. The Dow rose 129.84 to 33,826.69, and the Nasdaq fell 68.56 to 11,787.27.
In stock markets abroad, Hong Kong’s Hang Seng lost 1.3 per cent. Losses were amplified by news that a major tech industry dealmaker, Bao Fan, apparently has gone missing.
Shares in one of China’s top investment banks, China Renaissance, plunged Friday after the company said in a filing to Hong Kong’s stock exchange that it had lost touch with Bao, its founder. Bao’s disappearance follows a crackdown on technology companies in the past two years that officials in China said had been wrapped up.
AP
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