U.S. stocks suffered their longest weekly losing streak since September, with investors concerned that the Federal Reserve’s resolve to keep raising rates could tip the economy into a recession.

The S&P 500 and the tech-heavy Nasdaq 100 closed the session lower for a third day. The quarterly triple witching expiration of equity derivatives also amplified market moves on Friday. 

U.S. Treasuries were mixed, with the short-term bonds rallying on Friday. The policy-sensitive two-year yield ended the week nearly 19 basis points lower than where it started. The dollar was little changed. Oil notched a weekly gain. 

Investors had cheered the softer-than-expected inflation data earlier this week. But that euphoria faded as Fed officials hammered home the message that rates will go higher for longer until they’re confident inflation has been subdued. While the Fed raised rates by an expected 50 basis points on Wednesday, risk assets have been on the back foot ever since policymakers signaled a peak rate that was above market expectations. A wave of rate hikes and hawkish outlooks from central banks across the globe, including the European Central Bank, further bruised sentiment this week. 

Traders also contended with a flurry of U.S. data this week showing the economy cooling, even as the labor market stays strong. This didn’t sit well with investors as softening in the labor market remains a big target for the Fed. 

“The market has been in a tug-of-war between better-than-feared economic data juxtaposed with concerns about the potential for the Fed to over-tighten monetary policy and push the economy into a recession,” said Art Hogan, chief market strategist at B. Riley Wealth. “That tug-of-war will likely continue in the first quarter of 2023 unless and until the Fed gets to their terminal Fed Funds rate.” 

Some of the main moves in markets:

Stocks

• The S&P 500 fell 1.1 per cent as of 4 p.m. New York time
• The Nasdaq 100 fell 0.9 per cent
• The Dow Jones Industrial Average fell 0.9 per cent
• The MSCI World index fell 2.4 per cent

Currencies

• The Bloomberg Dollar Spot Index rose 0.1 per cent
• The euro fell 0.3 per cent to US$1.0594
• The British pound fell 0.1 per cent to US$1.2162
• The Japanese yen rose 0.8 per cent to 136.66 per dollar

Cryptocurrencies

• Bitcoin fell 3 per cent to US$16,884.02
• Ether fell 4.7 per cent to US$1,204.88

Bonds

• The yield on 10-year Treasuries advanced four basis points to 3.48 per cent
• Germany’s 10-year yield advanced seven basis points to 2.15 per cent
• Britain’s 10-year yield advanced nine basis points to 3.33 per cent

Commodities

• West Texas Intermediate crude fell 2.4 per cent to US$74.30 a barrel
• Gold futures rose 0.8 per cent to US$1,802.70 an ounce