Dow and S&P 500 both closed lower on Friday
Despite robust labor market reports, the Dow and S&P 500 both closed lower Friday on expectations that the Federal Reserve will begin increasing rates as soon as September.
The S&P 500 dropped 3.01 points, or 0.1%, closing at 2,092.83 – after declining as much a 0.5% in the morning. The Dow Jones Industrial Average dropped 56.12 points, or 0.3%, closing at 17,849.46. The S&P 500 is a stock market index of the 500 biggest companies (in terms of market capitalization) listed on NASDAQ and the New York Stock Exchange.
Notable decliners on Friday include Verizon Communications Inc., down 1.8%, Wal-Mart, which fell 1.47%, Intel Corp, which dropped 1.45%, and Coca-Cola Co., down 1.21%.
J.P. Morgan Chase & Co. finished up 1.6% – the biggest gain in the Dow.
The S&P 500 and Dow lost 0.7% and 0.9% for the week, respectively.
The S&P has fallen for two weeks straight and is at its lowest level since May 7.
Fed expected to begin increasing rates in September
According to a poll conducted by Reuters, banks expect the Fed to begin hiking rates in September followed by another increase before the year end.
Eric Kuby, chief investment officer at North Star Investment Management in Chicago, told Reuters:
“The market is excited about stronger jobs and higher wages, but before (investors) can pop the cork of the champagne bottle, they start thinking about the hangover, which is higher interest rates,”
“I think everyone is just waiting to see what happens when rates do start to rise.”