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Wall Street stumbled through an uncertain session on Friday, as investors continued to look ahead to next week's Federal Reserve meeting. The major U.S. equity averages finished modestly lower, resuming a slide that has marked most of the past couple weeks.
The Nasdaq Composite (COMP.IND) closed -0.7%, the S&P 500 (SP500) ended -0.7% and the Dow (DJI) finished -0.9%.
Reviewing the final numbers, the Dow Jones led the major averages lower, falling by 305.02 points to close at 33,476.46. The S&P 500 slipped 29.13 points to end at 3,934.38, while the Nasdaq fell 77.39 points to finish at 11,004.62.
Ten out of the 11 S&P sectors posted losses. This was led by a 2.3% slide in Energy, as crude hovered above $71 a barrel. Health Care fell more than 1% as well. Communication Services ended just above the flat line.
"The three major indices are each down around 3% on the week; the Russell again bearing the brunt, down around 5% on the week," Alex King of Cestrian Capital Research told Seeking Alpha.
King added: "Zooming out, all major markets remain significantly above their year lows –- the Dow in fact is just over 8% shy of its all-time high, a fact that is seemingly beyond the grasp of doomsayers everywhere, which bodes well for the other indices. We continue to look upwards towards year end."
Stocks came into Friday's trading with a little positive momentum, having finished the previous day higher, with the S&P 500 bouncing back following a five-session losing streak. However, this sentiment was undercut by hotter-than-expected wholesale inflation numbers, which raised concerns that the Fed will need to stick with its ultra-hawkish monetary policy.
The major averages bounced around near the flat line for most of Friday's session but accelerated into the red as the final bell approached, eventually ending the day modestly lower.
On the inflation front, the producer price index showed a rise of 0.3% for November. This topped the 0.2% increase that economists had predicted. At the same time, core producer prices also exceeded expectations, rising by 0.4%.
"Our PPI projections suggest that core PCE inflation is likely to fall much faster than the Fed expects. Policymakers will wait to see the downshift in consumer inflation, rather than responding immediately to the message from the PPI, but they likely won't have to wait long," Pantheon Macroeconomics said.
In other economic news, the University of Michigan's consumer sentiment index came in better than expected for December, climbing to a level of 59.1 compared to 56.8 in November. Economists were looking for a reading of 56.9.
"Varying economic conditions have left consumers dazed and confused," Wells Fargo economist Tim Quinlan said. "There is little in today's data to give policymakers at the Federal Reserve good reason to hold off on raising the fed funds rate another 50 bps at its meeting this coming Wednesday."
In the bond market, Treasury yields pushed higher. The 10-year Treasury yield (US10Y) climbed 9 basis points to 3.58%, while the 2-year yield (US2Y) rose 2 basis point to 4.33%.
Among active stocks, DocuSign (DOCU) rallied on better-than-expected financial figures. Meanwhile, Lululemon (LULU) dropped after including disappointing holiday quarter guidance in its quarterly update.