Stocks waver in choppy trading after the S&P 500 touches new lows

U.S. stocks struggled to find their footing in choppy trading Friday after a vicious sell-off that sent the S&P 500 to lows not seen since 2020.

The bellwether index hovered around the flatline, while the Dow Jones Industrial Average sank 120 points, or 0.4%. The technology-focused Nasdaq Composite gained 0.3%.

Investors will close out a brutal month and quarter on Friday. The S&P 500’s 2.1% drop on Thursday marked its 49th decline of 1% or more this year, marking the most downside volatility since 2009, according to Compound Advisors’ Charlie Bilello. For the month, the index is down roughly 8%, the Dow roughly 7%, and the Nasdaq about 3%.

On the corporate front, shares of Carnival (CCL) plunged 20% to their lowest since 1993 after the cruise line reported annual bookings and quarterly guidance that disappointed Wall Street.

Nike (NKE) was also among movers on Friday after the company reported a 44% surge in inventory and outlined other macroeconomic headwinds that weighed on the quarter. Shares plunged 11% despite earnings that came in line with expectations and the company reaffirming its full-year fiscal sales outlook.

And chipmaker Micron Technology (MU) shares nudged roughly 2% higher even as the company warned about tough times ahead for PC and smartphone demand and said it was slashing investments. Micron, however, forecast strong revenue growth in the second half of fiscal 2023, projecting a recovery in demand by that point.

In economic releases, the Federal Reserve’s preferred inflation gauge showed prices climbed more than expected in August. The personal consumption expenditures (PCE) price index rose 0.3% last month after retreating in July. On an annual basis, the PCE price index increased 6.2%. The so-called core PCE price index — which excludes the volatile food and energy components of the measure — rose 4.9% year-over-year in August, up from a 4.7% increase in July.

Meanwhile, the Commerce Department reported Friday that consumer spending increased 0.4% last month after slipping 0.2% in July.

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After an abrupt policy shift by the Bank of England earlier this week to restart bond purchases, investors in the U.S. had fleeting hopes the Federal Reserve may follow suit and ease the pace of its aggressive monetary stance. On Thursday, the odds of a softer 50-basis-point hike at the central bank’s November meeting rose above 50% but retreated back to around 40% as traders assessed hawkish Fedspeak and the lowest reading on jobless claims in five months.

In an interview with CNBC on Thursday, Federal Reserve Bank of Cleveland President Loretta Mester asserted she and her peers will maintain restrictive policy until inflation subsides and distinguished the U.K.’s market turmoil from conditions in the U.S.

“Market functioning is incredibly important because you won’t be able to hit any monetary policy goals if the markets aren’t functioning,” Mester said. “That’s different than worrying about volatility in the markets,” adding that so far there has been no dysfunction in U.S. markets.

And on Friday, Fed Vice Chair Lael Brainard hinted that the central bank will keep rates high in the face of continued high inflation.

“Monetary policy will need to be restrictive for some time to have confidence that inflation is moving back to target,” she said in prepared remarks for a speech at a New York conference. “For these reasons, we are committed to avoiding pulling back prematurely.”

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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