By Yasin Ebrahim
Investing.com -- The Dow fell to its fourth straight weekly loss Friday as surging Treasury yields continued to hammer tech after data showing inflation remains red-hot stoked deeper fears of the Federal Reserve turning more aggressive on rate hikes.
The Dow Jones Industrial Average fell 1.02%, or 336 points, and the Nasdaq Composite was down 1.7%. The S&P 500 fell 1%, closing out its biggest weekly loss in 2023.
The core personal consumption expenditures price index, or core PCE deflator, the Fed’s preferred inflation metric, gained 4.7% year over year in January, topping economic forecasts for 4.3%.
The hot inflation print arrived just as data showed a stronger-than-expected consumer, strengthening expectations that the Federal Reserve may have to hike by more than previously expected.
"I think the trajectory [of Fed rate hikes] is going to be probably 25 basis points, maybe three more times," Eric Diton, President and Managing Director at The Wealth Alliance, said in an interview on Friday with Investing.com's Yasin Ebrahim. The Fed's policy measures are working, but it takes time, Diton adds. "It can take one to two years for this tightening to fully take effect."
Treasury yields added to recent gains following the data, with the 10-year Treasury yield inching closer to the 4% mark, sparking a rout in rate-sensitive sectors of the economy including tech.
Google-parent Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), and Apple (NASDAQ:AAPL) closed down about 2%.
Netflix (NASDAQ:NFLX), meanwhile, continued to add to loss from a day earlier even as some on Wall Street believe the streaming giant’s recent announcement to cut subscription prices from 20% to 60% in over 30 countries could boost growth.
“While on the surface these are significant pricing reductions, we believe that the impact to total revenue will be relatively limited given already low ARPUs across these territories," Bank of America said in a note.
On the earnings front, Beyond Meat (NASDAQ:BYND) reported a narrower-than-expected loss in the fourth quarter driven by cost cuts, and said it was on track to churn out positive cash flow in the second half of the year, sending its share price soaring 10%.
UBS said, however, Beyond Meat remains a “show me” story and pointed to concerns “about the company's ability to improve the sales trajectory in a meaningful way, especially if the economic environment deteriorates further.”
Carvana (NYSE:CVNA) fell 20% after the used-vehicle e-commerce platform reported a much wider loss than expected amid rising costs and higher interest rates.
Carvana forecast sales volume to continue to decline in Q1 as it continues its transition to right-size its business following an aggressive growth strategy in the pandemic.
“This transition period “may last for a couple of years before it can refocus on top-line growth,” Deutsche Bank said in a note after cutting its price target on the stock to $10 from $16.
In other news, Adobe Systems (NASDAQ:ADBE) plunged nearly 8% amid reports the U.S. Department of Justice may file an antitrust lawsuit as soon as next month to block the company's $20 billion acquisition of Figma.
As the broader market wraps up its biggest weekly loss for this year, some suggest this could be a buying opportunity as leadership of tech stocks is expected to wane.
"I do think it's a buying opportunity," Diton said, pointing to areas of the market including value, small cap and emerging market stocks.
"It's small cap that's gotten to the cheapest valuations we've seen since the financial crisis," Diton added. "It's international, which is outperforming which no one can believe, and emerging markets. I think that those are the areas that we're going to see outperform."