S&P 500 Stumbles as Signs of Higher for Longer Inflation Add to Fed Fears By Investing.com

By Yasin Ebrahim

Investing.com — The S&P 500 fell Friday, as data pointing to growing expectations for higher for longer inflation stoked investor jitters further about Federal Reserve rate hikes, pushing tech lower.

The fell 1.7%, the fell 0.9%, or 273 points, and the was down 2.2%.

The University of Michigan showed that the median expected rate rose to 5.1%, above the 4.7% seen in September.

A climb in inflation expectations, a closely watched metric by the Federal Reserve, comes just a day after data showed worse-than-feared inflation pressure.  

“[W]e see drivers of disinflation on the horizon, most notably from a reversal in vehicle prices and a downshift in medical services,” Morgan Stanley said. “Risks are tilted towards more Fed tightening this year,” it added.

Treasury yields climbed, with the topping 4%, as the odds for a 0.75% Fed rate hike for November are now

Rising rates weighed heavy on growth sectors of the market including tech and consumer discretionary stocks. 

Apple Inc (NASDAQ:), down 2%, led big tech lower, with Microsoft Corporation (NASDAQ:), Alphabet (NASDAQ:) and Meta Platforms (NASDAQ:) down more than 1%.

Major Wall Street banks, meanwhile, kicked off the quarterly earnings season in earnest, with mostly better-than-expected quarterly results. 

JPMorgan Chase & Co (NYSE:) rose more than 2% after reporting better-than-expected , as rising interest rates boosted net interest income offsetting weakness in investment banking revenue.

(NYSE:) and (NYSE:) also reported better-than-expected quarter results, but Morgan Stanley (NYSE:) bucked the trend as weaker performance in its investment banking business .

Tesla (NASDAQ:) slumped more than 5% dragging consumer discretionary stocks lower after Wells Fargo cut its price target on the stock to $230 from $280 a share, citing worries about the impact of higher interest rates.

The price cut comes just a week ahead of the electric automaker’s third-quarter results slated for Oct. 19.

In deal news, Albertsons (NYSE:) fell more than 8% on reports that Kroger (NYSE:) had agreed to purchase the Safeway owner in a deal valued at $24.6 billion, or $34.10 a share.