By Ryan Dezember
Nike shares tumbled to their worst day on record, dragging the Dow and S&P 500 to losses on Friday.
It was a downbeat ending for an otherwise gangbusters first half for stocks.
Despite declining 0.4%, the S&P 500 ended Friday within 27 points of a record high. The companies in the broad index have added nearly $6 trillion in market capitalization so far this year, the largest first-half gain on record.
The tech-laden Nasdaq Composite shed 0.7% Friday but also remains near its all-time high. It was the only of the three big indexes to end the week higher. The Dow Jones Industrial Average lost 0.1%, or 45 points.
Nike, which reported an unexpected sales decline and issued a gloomy outlook Thursday after market hours, fell 20% in its biggest one-day decline on record. The shoemaker, which has lost ground in the critical running category, was the worst performer by a mile in both the Dow and the S&P 500.
Treasury yields rose. The yield on the benchmark 10-year note climbed to 4.342%, from 4.287% on Thursday. Yields, which rise as prices fall, climbed for the second straight quarter and the eighth of the last 10.
Stocks traded higher in the morning, following a fresh reading of the Federal Reserve's preferred inflation gauge that suggested moderating price pressures.
The personal-consumption expenditures price index rose 2.6% in May from a year earlier, in line with the expectations of economists polled by The Wall Street Journal. The May reading was the lowest since 2021 and compares with a 2.7% rise in April.
Investors said data like that, as well as corporate earnings expectations. were still driving their investment decisions more than the coming presidential election.
"It's still early to bake election potential outcomes into investment at this stage," said Jimmy Chang, chief investment officer at Rockefeller Global Family Office. "Especially after yesterday's debate because now you have a little bit of uncertainty about the Democratic nominee."
He said he didn't believe that the election would factor into the Fed's next interest-rate decisions as long as economic data supports a cut.
"If you see a softening of the employment picture and a continued easing of inflation, they can probably sneak one in," Chang said.
Jeremiah Buckley, portfolio manager at Janus Henderson Investors, said data like Friday's inflation gauge increases the likelihood that the Fed will cut interest rates at the central bank's September meeting, as many investors and traders expect.
"The inflation numbers continue to point in the right direction, so the Fed has the flexibility to do so," he said. "There's a risk that if the Fed waits too long there will be impacts on housing and construction that will be hard to reverse."
Apartment construction is an example, he said. Though there is a glut of new apartments, few new projects are under construction given high financing costs. Without a pipeline of new housing, rents could surge again.
In commodities, corn prices had their worst day of the year after an Agriculture Department report said farmers have planted more acres with America's top cash crop than expected. Most-traded futures, for December, fell 3% to $4.2075 a bushel, among the lowest prices since 2020.
Overseas, stocks were mixed Friday. Major indexes in Asia rose, including Japan's Nikkei 225, up 0.6%. The Shanghai Composite gained 0.7%.
Indexes mostly ended lower in Europe, including London's FTSE, which shed 0.2%. France's CAC 40 lost 0.7% ahead of the first round of voting in the parliamentary election on Sunday.
Write to Ryan Dezember at ryan.dezember@wsj.com
(END) Dow Jones Newswires
June 28, 2024 16:26 ET (20:26 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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