ASX retreats after more Wall Street losses

A choppy day of trading on Wall Street ended Friday with an uneven finish for the major stock indexes, as mixed economic data stoked worries that the Federal Reserve’s work on bringing inflation to heel isn’t done.

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The S&P 500 slipped 0.1 per cent after wavering between small gains and losses most of the day. The benchmark index fell 0.3 per cent for the week, its second consecutive losing week.

The Nasdaq composite fell 0.7 per cent, reflecting a pullback in big tech companies. The Dow Jones Industrial Average eked out a 0.3 per cent gain.

Stocks lost ground in the early going after the Labor Department reported Friday that its producer price index, which measures inflation before it hits consumers, rose 0.8 per cent last month from July 2022. The latest figure followed a 0.2 per cent year-over-year increase in June, which had been the smallest annual rise since August 2020.

Bond yields rose, including the two-year Treasury yield, which climbed to 4.89 per cent. The yield, which closely tracks expectations for the Fed, had been at 4.80 per cent right before the report’s release. The yield on the 10-year Treasury rose to 4.16 per cent from 4.10 per cent late Thursday. It helps set rates for mortgages and other important loans.

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Traders also weighed a preliminary reading in a University of Michigan survey that showed consumer sentiment down slightly from July, when it climbed to its highest level since October 2021. The latest consumer sentiment index was 71.2, down from 71.6 in July and below analysts’ consensus forecast of 71.3, according to FactSet.

Among its findings, the latest survey found that consumers’ expectations for inflation in the coming year edged lower. That’s good news, as the Fed has been adamant about wanting to avoid a vicious cycle where expectations for high inflation drive behavior that only worsens it.

The major indexes have lost some steam after standout rally through the first seven months of 2023, but remain solidly higher for the year. The S&P 500 is up 16.3 per cent, the Nasdaq is up 30.4 per cent and the Dow is up 6.4 per cent.