Wall Street Update: Dow Jones posts worst week in four months as rate hike fears return

Benchmark indices on Wall Street declined on Friday and posted losses for the week as fears of the US Federal Reserve continuing to hike interest rates returned to spook investors.

The S&P 500 ended 0.3 percent lower, while the Nasdaq fell 0.1 percent. The Dow Jones saw a cut of nearly 200 points or 0.55 percent.

For the week, the Dow fell nearly 2 percent, marking its worst weekly drop in four months.

Stronger-than-expected wage numbers heightened fears that the central bank may have reason to resume hiking later this month. Average hourly earnings increased by 0.4 percent in June and 4.4 percent from a year ago. Meanwhile, the unemployment rate declined from 3.7 percent in May.

Traders kept their bets on a resumption in hiking later this month, pricing in a 92 percent chance of a quarter-point hike on July 26. Latest minutes of the FOMC meeting in June indicated that policymakers are anticipating two more rate hikes in 2023.

“It’s kind of a mixed picture today,” said Truist’s Keith Lerner. “It’s good news that the economy is not falling apart, it’s still chugging along, but you still have these wage pressures that are going to keep the Fed likely to raise rates at the end of the month.”

Near term, Lerner said equities are ripe for a pullback following a big June and second quarter. This could lead to consolidation and choppy action as markets head into earnings season.