US stocks declined sharply on Friday, capping off a week of significant losses as Federal Reserve Chair Jerome Powell hinted at a more cautious approach to future interest-rate cuts. The S&P 500 (^GSPC) fell 1.3%, the Dow Jones Industrial Average (^DJI) slipped 0.7%, and the Nasdaq Composite (^IXIC) led losses with a 2.2% drop.
The Nasdaq posted a weekly decline of over 3%, while the S&P erased one-third of its post-election rally. Investors are recalibrating expectations amid Powell’s hawkish remarks and a cooling enthusiasm for President-elect Donald Trump’s economic policies.
Retail sales data released Friday painted a picture of consumer resilience, with October sales rising 0.4% month-on-month, beating expectations. September’s growth was also revised upward to 0.8%. However, this robust consumer activity supports Powell’s stance that the economy is strong enough to delay aggressive rate cuts.
Market expectations for a December rate cut have dropped to 62%, down from 72% a day earlier, according to the CME FedWatch tool. Odds of a January easing also dipped to 74% from 81%.
Investors are also monitoring Trump’s transition plans. Vaccine stocks slipped amid reports that Robert F. Kennedy Jr. might be tapped for a top health role, while JPMorgan Chase CEO Jamie Dimon confirmed he would not join Trump’s administration.
