The stock market’s post-election rally lost steam on Friday as investors grew concerned about the path of interest rates. The Dow Jones Industrial Average fell 305.87 points, or 0.70%, to close at 43,444.99. The S&P 500 slipped 1.32% to end at 5,870.62, while the Nasdaq Composite dropped 2.24% to finish at 18,680.12.
The market’s turning point came on Thursday when Federal Reserve Chair Jerome Powell said the central bank would take a cautious approach to cutting interest rates. He noted that the economy’s strong growth will allow policymakers to take their time as they decide the extent to which they reduce rates. Traders also grappled with recent comments from Boston Fed President Susan Collins, who told The Wall Street Journal that October retail sales data showed a 0.4% increase, slightly better than the 0.3% forecast from economists polled by Dow Jones.
The major averages had been riding a post-election rally since Donald Trump’s victory at the polls. However, upward momentum has been slowing, with the S&P 500 posting a weekly loss of 2.1%, the Nasdaq Composite sliding about 3.2%, and the Dow falling 1.2%. Declines in pharmaceutical stocks weighed on the Dow and the S&P 500, with Merck down about 4.2% and Eli Lilly off by 7.3%.
Market reacts to rate concerns
The information technology sector of the S&P 500 was the worst-performing corner of the market, down more than 2%. The U.S.’ six most valuable tech companies—Nvidia, Apple, Microsoft, Amazon, Alphabet, and Meta—lost $458 billion in market capitalization on Friday, according to YCharts data.
Amazon and Nvidia each saw more than $90 billion wiped from their market values. Healthcare stocks also slumped, with the S&P Healthcare sector dipping 1.9% as Pfizer stock sank 4%. The decline continued the trend from late Thursday after President Trump appointed vaccine skeptic Robert F.
Kennedy Jr. as the Secretary of the Department of Health and Human Services. Despite these warnings, Bank of America maintains a year-end price target of 6,000 for the S&P 500, projecting a 2% rise from Friday’s 5,860.
Meanwhile, Goldman Sachs strategists recently estimated that lower corporate tax rates proposed by Trump would boost earnings estimates for S&P companies by 4% annually.
