On Friday, the stock market experienced a sharp decline with major indexes closing the week with significant losses. This was attributed to the release of a report indicating that the Personal Consumption Expenditures (PCE) price index for January was higher than expected, which solidified expectations that the Federal Reserve would raise interest rates higher than previously anticipated to control inflation. The Dow Jones Industrial Average fell around 1%, the S&P 500 dropped 1.1%, and the Nasdaq Composite declined by 1.7%. As a result of the week’s performance, the Dow had a weekly fall of 3.7%, while the S&P 500 and Nasdaq were down by 2.6% and 1.6%, respectively.
This news reflects the ongoing concern about inflation and the potential actions the Federal Reserve may take to address it. Higher interest rates can help to cool down an overheated economy, but they can also lead to lower stock market returns as investors become more cautious.
