Tech giants dragged Wall Street lower, a notable drop for major indexes ahead of next week’s interest rate announcement

After an increase of about one percent for all three major indexes on Wall Street before the start of trading on Friday, it looked like a good development for the week overall.

However, at closing time on the last trading day of the week, everything was erased, so to speak:

• The Nasdaq index fell 1.6 percent on Friday and ended the week down 0.4 percent.
• The Dow Jones fell 0.8 percent and managed to rise 0.1 percent during the week.
• The S&P 500 fell 1.2 percent and closed down 0.2 percent during the week.

After the initial collapse on Wall Street on Thursday, chipmaker Arm continued to rise from the beginning on Friday, but ultimately fell by more than four percent.

Otherwise, declines of 2% or more in shares of Amazon, Microsoft, Meta and Nvidia helped pull down the technology-rich Nasdaq index.

Government interest rates rose somewhat during the day. The two-year interest rate rose again to just over 5 percent, while the ten-year interest rate reached about 4.32 percent.

Interest rate notice for this week

After a week of inflation and PPI numbers, the market’s attention has now turned to next week’s interest rate decision from the Federal Reserve, which will come on Wednesday evening, Norway time.

At the time of writing, there is a 97% chance that interest rates will remain in the 5.25 to 5.5% range, according to the CME Fedwatch tool. The US central bank has raised interest rates 11 times since March of last year.

Among the factors contributing to the higher-than-expected inflation numbers for August was higher energy prices, especially fuel, which was the driver behind more than half of the 0.6 percent monthly rise. The rise in gasoline prices coincided with extended production cuts from Saudi Arabia and Russia, pushing North Sea oil prices to their highest level in ten months.

Following Wednesday’s decision, there are still two more interest rate committee meetings before the end of the year, and the central bank itself has been clear that further tightening will be undertaken if necessary. In its latest forecast, the Federal Reserve indicated that there will be another increase in interest rates before 2024.

Arm enthusiasm

After what was arguably a very successful stock market debut for the UK-based chipmaker, Arm’s listing is now providing optimism for the market.

After a boom in new listings during the pandemic, they have almost completely dried up in the past two years. When Arm completed its IPO (initial public offering) on ​​Wednesday evening, it was the largest amount raised in connection with an IPO since Rivian in 2021.

Earlier this week, Birkenstock, among others, announced its intention to go public.

Arm, for its part, is now worth about $65 billion, up from about $50 billion before its market debut.

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