US stocks muted as Federal Reserve meeting and wave of corporate earnings loom

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US stocks were mixed on Friday, following a steep drop in large-cap technology stocks in the previous session, with traders turning their attention to the Federal Reserve’s policy meeting next week and a wave of corporate results.

Wall Street’s benchmark S&P 500 made fractional gains on Friday, led by defensive sectors such as healthcare, consumer staples and utilities. It advanced 0.7 per cent across five sessions, its second straight week of gains. The tech-focused Nasdaq Composite lost 0.2 per cent on the day, and was 0.6 per cent lower for the week.

The moves came a day after technology stocks sold off sharply across the US and Europe, as earnings reports by industry heavyweights Tesla and Netflix failed to impress investors. A warning on Thursday from the world’s biggest contract chipmaker — Taiwan Semiconductor Manufacturing Company — of a deepening semiconductor downturn, also weighed on sentiment.

“The bears were finally able to find some solace in the market’s reaction to Tesla’s earnings, and again Netflix, although their numbers certainly weren’t dire,” said Quincy Krosby, chief global strategist for LPL Financial.

The tech sector will remain in focus next week, with Alphabet, Amazon, Meta and Microsoft due to report quarterly results. Scores of other big US companies across the corporate spectrum are set to report next week and share insights on consumer demand and their outlook for the economy.

Separately, traders expect the Fed to conclude its current phase of monetary tightening next week with a 0.25 percentage point increase to the benchmark federal funds rate, bringing it to a target range between 5.25 per cent and 5.5 per cent.

The yield on the two-year US Treasury note, which is sensitive to monetary policy expectations, was up fractionally in Friday afternoon trading at 4.85 per cent. The benchmark 10-year Treasury yield was down 0.01 percentage points at 3.84 per cent. Bond yields fall as prices rise.

The dollar, which tends to strengthen when investors expect higher rates, added 0.3 per cent against a basket of six peer currencies to reach its highest point in more than a week.

“With inflation dynamics looking more encouraging, the general notion is that central banks are close to their cycle peaks in terms of tightening,” said Padhraic Garvey, Americas regional head of research at ING.

The Bank of Japan and the European Central Bank will also hold interest rate-setting meetings next week.

In Europe, the region-wide Stoxx 600 index recovered after early-morning losses to end the day 0.3 per cent higher. France’s Cac 40 added 0.6 per cent. Germany’s Dax index was the only faller in Europe, down 0.2 per cent.

The indices were lifted as European energy stocks edged higher on the tail of rising oil prices, as investors expected that Chinese officials would next week announce more measures to support the world’s second-largest economy.

Brent crude, the international benchmark, settled 1.8 per cent higher to $81.07 a barrel, while US benchmark West Texas Intermediate added 1.9 per cent to $77.07 a barrel.

“The measures released till now have been underwhelming relative to expectations [ . . . ] we could see more stimulus measures over the coming weeks, which should provide short-term support to the market,” said Mohit Kumar, chief Europe financial economist at Jefferies, in relation to China.

Equities were mixed in Asia, with Hong Kong’s Hang Seng adding 0.8 per cent while China’s benchmark CSI lost 0.1 per cent.