US benchmark indexes ended the last session of the week lower despite briefly touching positive territory midday Friday as the Federal Reserve's preferred inflation measure accelerated in August and a closely monitored consumer sentiment gauge was revised lower.
The Dow Jones Industrial Average fell almost 2% to 28,725.51, the S&P 500 slipped 1.5% to 3,585.62 and the Nasdaq Composite dropped 1.5% to 10,575.62. For the week, all the benchmark indexes were close to 3% lower. For the month, all three suffered from sharp losses as the Nasdaq Composite finished 10.5% lower, the S&P 500 was down 9.3% and the Dow Jones tumbled nearly 9%.
Utilities and technology led the decliners, with real estate the sole gainer.
The 10-year yield gained 7.2 basis points to 3.82%, while the two-year rate surged 8.8 basis points to 4.26%.
In economic news, growth in the core personal consumption expenditure index, which excludes food and energy and is the Fed's preferred measure, advanced to 4.9% in August from 4.7% in the previous month, beating the Street's view for a 4.8% reading. Annual PCE inflation eased to 6.2% in August from 6.4% in the prior month but was still above the market forecast.
The University of Michigan consumer sentiment index was revised lower to 58.6 for September from 59.5 in the preliminary estimate, compared with expectations for no revision in a survey compiled by Bloomberg. That was still modestly above the final reading of 58.2 in August. Respondents expected a 4.7% inflation rate over the next year and 2.7% annual inflation over the next five years, down from 4.8% and 2.9%, respectively, in August.
Monetary policy likely will remain restrictive until it's clear inflation has slowed amid "very high" price pressures, Federal Reserve Vice Chair Lael Brainard said Friday in a speech at a Fed-sponsored conference on financial stability.
"It will take time for the full effect of tighter financial conditions to work through different sectors and to bring inflation down," she said. "Monetary policy will need to be restrictive for some time to have confidence that inflation is moving back to target. For these reasons, we are committed to avoiding pulling back prematurely."
West Texas Intermediate futures dropped 2% to $79.62 a barrel.
In company news, Nike (NKE) received lower price targets Friday from analysts at firms including Morgan Stanley and RBC Capital Markets after the athletic apparel and footwear company late Thursday reported a fiscal Q1 gross margin below Street expectations and cut guidance for its fiscal 2023 gross margin. Shares slumped 12% intraday, the steepest decliner on the Dow and the fourth-worst on the S&P 500.
Carnival Corp. (CCL, CUK) expects to report a loss in the fiscal third quarter as higher fuel prices and advertising costs delay the cruise liner's return to profitability. Shares sank 23%, leading the decliners on the S&P 500.
Gold was up slightly to $1,669.40 per troy ounce, and silver was up 1.7% to $19.02 per ounce.