S&P 500 Logs Weekly Loss As Investors Digest Latest Fed Chair Commentary

Zinger Key Points
  • The S&P 500 posted its worst weekly performance since December as earnings numbers underwhelmed.
  • The U.S. Labor Department releases its January Consumer Price Index reading on Tuesday.

The SPDR S&P 500 ETF Trust SPY lost 0.43% this week as fourth-quarter earnings numbers continue to underwhelm.

On Friday, the University of Michigan reported U.S. consumer sentiment increased 2.3% on a monthly basis in February and is now up 5.7% from a year ago. Consumers' median expected year-ahead inflation rate also ticked higher from 3.9% in January to 4.2% in February.

In remarks to the Economic Club of Washington on Tuesday, Federal Reserve Chair Jerome Powell said U.S. disinflation "has begun" but reiterated that it will take some time for the pricing environment to fully normalize.

“If we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in,” Powell said.

Shares of Google parent company Alphabet, Inc. GOOG GOOGL traded lower this week after its artificial intelligence chatbot Bard failed to impress Wall Street at Google's AI event on Wednesday. Investors are concerned about the potential impact OpenAI's ChatGPT could have on Google's search business now that ChatGPT has been integrated into the Microsoft Corp MSFT Bing search engine.

On its earnings call on Wednesday, Walt Disney Co DIS CEO Bob Iger announced a bold restructuring plan that will make ESPN its own business unit. The plan also includes $5.5 billion in cost cuts, 7,000 layoffs and even a potential sale of Disney's 66% ownership stake in video streaming service Hulu.

Dropped Off: Shares of popular ridesharing stock LYFT Inc LYFT declined nearly 40% this week after the company reported an unexpected earnings loss in the fourth quarter and issued weak first-quarter guidance.

In the week ahead, investors will get more quarterly reports from Coca-Cola Co KO on Tuesday and Energy Transfer LT LT, Barrick Gold Corp GOLD and Cisco Systems Inc CSCO on Wednesday.

Analysts have cut their average first-quarter S&P 500 earnings estimates by 3.3% year-to-date, according to FactSet.

Economic Numbers: Investors will get key economic updates on Tuesday when the U.S. Labor Department releases its January Consumer Price Index reading and on Wednesday when the U.S. Census Bureau releases its January Retail Sales report.

Photo via Shutterstock.

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