Stocks finished lower Friday, with all the major averages posting losses for the week as worries persisted over continued rate hikes.
The Dow Jones Industrial Average shed 305.02 points, or 0.9%, to close at 33,476.46. The S&P 500 tumbled 0.73% to end at 3,934.38, while the Nasdaq Composite fell 0.7% to finish at 11,004.62.
On a weekly basis, the Dow fell 2.77% to post its worst week since September. The S&P tumbled 3.37%, while the Nasdaq dropped 3.99%.
Friday's moves came after November's producer price index showed higher-than-expected wholesale prices, which rose 0.3% last month and 7.4% over the previous year. Core PPI, which excludes food and energy, also topped expectations.
Optimistic consumer sentiment data alleviated some fears, but attention remains laser-focused on next week's busy economic calendar.
Attention shifted toward the consumer price index due out Tuesday, which is expected to show whether inflation has receded. The Federal Reserve will likely deliver a 50 basis point hike at the end of its December meeting on Wednesday. While the increase would be smaller than the previous four hikes, concerns have mounted over whether the central bank can architect a soft landing and prevent a recession.
Investors have long hoped for a pivot from the Fed's aggressive tightening stance, but the data fails to support that desire, said Stephanie Lang, chief investment officer at Homrich Berg.
"It's our expectation that we really need to see inflation come down closer to the fed funds rate for the Fed to pause, and we still have quite a bit of delta between those numbers," she said. "There's still a bit of work to be done on the inflation front to really see that as the reality."
In other news, shares of Lululemon tumbled nearly 13% after the company gave a weaker-than-expected fourth-quarter outlook. DocuSign jumped on strong results.
Stocks finished lower Friday, with all the major averages closing out the week with losses.
The Dow Jones Industrial Average shed 305.02 points, or 0.9%, to close at 33,476.46. The S&P 500 tumbled 0.73% to end at 3,934.38, while the Nasdaq Composite fell 0.7% to finish at 11,004.62.
For the week, the Dow fell 2.77% to post its worst week since September. The S&P tumbled 3.37%, while the Nasdaq dropped 3.99%.
— Samantha Subin
The relative strength of the U.S. consumer is going to help prop up inflation, meaning that bringing price increases down to normal levels is going to take longer than expected.
"Our expectations are that inflation gets in control really at the end of next year to 2024," Brian Moynihan, Bank of America's CEO, said during an interview with CNBC Friday.
"This is going to take a little longer than people would like, it's not going to be clear overnight," Moynihan said. "It's going to take a bit of time for higher short-term rates to continue to slow down the economy and bring inflation under control."
The Federal Reserve Bank has delivered four 0.75 percentage point increases to its benchmark rate and its widely expected to hike rates by another 0.5 percentage point in the coming week. They are likely to continue with rate hikes if inflation data keeps coming in hotter than expected.
With that in mind, Bank of America anticipates that rates will continue to climb and stay elevated next year. Keeping rates high will be integral to bringing inflation in check.
"Whether the terminal rate is five or five and a half is not as important as holding it there until we're sure," said Moynihan.
— Carmen Reinicke
If history is any guide, a trend higher in the market could kick off as soon as next week, according to Jeffrey Hirsch of the Stock Trader's Almanac.
"Over the last 21 years, the market typically begins its march higher on or around the tenth trading day of December," he wrote. "This year the tenth trading day is December 14, the same day as the Fed announcement."
This period, he said, is also near the time that tax-loss selling pressures typically subside.
Next week, Hirsch expects the Federal Reserve to deliver a widely expected 50 basis point rate hike, but continue shifting toward a "more dovish stance." That, he said, would be enough of a reason to kick off a rally into the end of the year and even 2023.
"We remain bullish and look for additional confirmation for this stance from the market next week," he wrote.
— Samantha Subin
Lululemon shares fell Friday after the athleisure maker issued a weaker-than-expected outlook. Morgan Stanley still sees a lot of good in the stock, however, and raised its price target on it Friday.
The firm reiterated its overweight rating on shares and raised its price target to $387, about 17% from where it closed Thursday.
"The stock is likely taking a breather following its +34% run since October, and market expectations got ahead of themselves," Morgan Stanley equity analyst Alex Straton said in a note. "Fundamentals continue to be strong and the company's ability to drive exceptional demand against a challenged consumer and macro backdrop remains impressive."
— Tanaya Macheel
Stocks were mostly lower as the final hour of trading kicked off Friday.
The Dow Jones Industrial Average last traded 85 points, or 0.3% lower, and was on pace for its worst week since September. The S&P 500 and Nasdaq Composite traded down 0.1% and up 0.1%, respectively.
— Samantha Subin
Elon Musk said Friday any economic downturn would be more severe if the Federal Reserve tightens policy again next week.
The Fed will conclude a two-day meeting Wednesday with an announcement on where interest rates are heading. Central bank officials have indicated, and markets widely anticipate, another 0.5 percentage point hike.
— Yun Li
Costco is uniquely situated in an inflationary environment and could stand to win more members as consumers get increasingly price conscious, according to Cowen.
"Costco is well-positioned in an inflationary environment and could also benefit from increased trade down traffic as higher income consumers shop for quality value," analyst Oliver Chen said in a note to clients.
He named the stock a best idea for 2023. CNBC Pro subscribers can read more about why.
— Alex Harring
Wall Street's top strategist Marko Kolanovic said he has turned bearish after November's rally.
"The market was moving higher and higher last month and we are at this point quite actually nervous that we would see the downside," JPMorgan's Kolanovic said on CNBC's "Halftime Report."
The strategist said a combination of lower earnings and higher terminal rates means that stocks have some room to decline from here.
For 2023, Kolanovic said the market could retest its bottom in the first quarter or second, and then stocks could see a rebound as the Federal Reserve reverses its policy.
The top-rated strategist had been one of the biggest bulls on Wall Street this year. He has correctly advised investors to buy the comeback in the second half of this year, but now is rethinking that view.
— Yun Li
Mizuho downgraded Coinbase to underperform from neutral, saying the company could struggle if an agreement that is a key driver of revenue gets negotiated.
Managing Director Dan Dolev cut the price target to $30, which implies the stock would drop 30% from where it closed on Thursday. He said Coinbase's agreement with Circle that brings over some of the latter's investment interest as revenue could get renegotiated, which could hurt the Coinbase's earnings in the future.
"Our assessment of consensus estimates for interest income for COIN suggests that the Street is underestimating the potential risks," he said in a note to clients.
CNBC Pro subscribers can read more about the downgrade here.
— Alex Harring
Ongoing volatility as the market digests the latest economic data creates an opportunity for investors to buy up some valuable stocks that get dragged into the chaos, according to John Stoltzfus, Oppenheimer's chief investment strategist.
"All of this, it creates a period of volatility, which we think actually offers opportunity for investors to catch some babies that get thrown out with the bathwater," he told CNBC's "Squawk on the Street" on Friday.
— Samantha Subin
These stocks had some of the biggest moves during midday trading
— Michelle Fox
Analysts at Jefferies are turning pessimistic on life insurance stocks heading into the new year.
In a note to clients on Thursday night, analyst Suneet Kamath downgraded Equitable Holdings and MetLife to hold from buy, trimming price targets on both stocks.
"We don't see YTD tailwinds from rising interest rates, lower COVID mortality and low credit losses as drivers of P/E expansion in 2023, yet see some recessionary risks," Kamath wrote.
MetLife was modestly lower Friday.
— Jesse Pound
Goldman Sachs upgraded shares of Jazz Pharmaceuticals to buy from neutral based on its positive outlook on operating margin performance and multiple expansion.
For one, Goldman cites Jazz Pharmaceuticals' guidance for 5% adjusted operating margin improvement by 2025, a goal which it has already met this year.
"As such, we believe management will be able to maintain these operating margin improvements into 2025, even without substantial top-line growth from key franchises," analyst Madhu Kumar wrote in a note Thursday.
There is also strong demand for its blood cancer therapy Rylaze, potential acceleration in the launch of its idiopathic hypersomnia (IH) drug Xywav and opportunity for revenue growth with its epilepsy drug Epidiolex, he said.
Kumar modestly lowered his price target to $190 from $192, implying nearly 27% upside from Thursday's close.
— Michelle Fox
Shares of Exxon Mobil have soared more than 70% so far this year, and still have more room to run, Goldman Sachs analyst Neil Mehta wrote in a note Friday.
"While we recognize XOM has outperformed the S&P and the Brent price sharply this year, we still believe the business is undergoing a multi-year transformation, with strong capital returns, volume growth, and improved corporate transparency," he said.
Mehta raised his enterprise value/debt-adjusted cash flow multiple to 7.5x from 7.0x and adjusted his earnings-per-share estimates to $13.58 in 2022, $9.31 in 2024 and $9.59 in 2024 from $14.15, $12.33, and $9.58, respectively. Because of those updates, Goldman dropped its price target to $116 from $121, still representing 11% upside from Thursday's close.
— Michelle Fox
The potential for a Santa Claus rally into the end of the year depends on next week's consumer price index report, according to Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
"It is likely that the Fed will move ahead with their plans of reducing the rate hike down from 75 bps per meeting to 50 bps per meeting, but if there is any chance of a Santa Claus rally this year, it will hinge on the inflation data next Tuesday coming in lower than expected," he wrote.
— Samantha Subin
Needham downgraded Carvana to hold from buy as fears over the long-term health of the company mount.
Bloomberg first reported earlier this week that some of the used car platform's creditors were banding together for negotiations. This has raised concern over a Chapter 11 bankruptcy in the near future.
Needham said the market may be pricing in a bankruptcy as the stock has fallen over the last two days. While the company appears to have methods for acquiring cash like real estate and vehicle inventory, the firm said a long-term solution is not yet apparent. Needham said recent layoffs only lowered faith in management's ability to turn the company around.
"While we think CVNA has a potential strategic path, we're not convinced it will prove successful over the long term," analyst Chris Pierce said in a note to clients Friday.
In addition to downgrading the stock, Pierce removed a price target after it was previously set at $20. The stock's price closed Thursday at $4.96.
Carvana had dropped 38.5% this week following the Tuesday Bloomberg report. The stock has dropped 97.9% so far this year.
— Alex Harring
Expectations of a 50 basis point hike next week from the Federal Reserve stand despite November's higher-than-expected producer price index.
"It's unlikely today's hotter-than-expected report would be enough to push the Fed to stick with the 75 basis point hikes next week, but any negative news on the inflation front is a thorn in the side of both the Fed and investors," said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.
— Samantha Subin
Consumers grew more optimistic about the economy and less worried about inflation in December, according to a closely watched survey.
The University of Michigan Index of Consumer Sentiment rose to 59.1 for the month, up from 56.8 in November and ahead of the Dow Jones estimate for 56.5, according to a preliminary reading Friday. The index remains well below its year-ago level of 70.6, which was 16.3% higher than the current reading.
On inflation, one-year expectations fell to 4.6% from 4.9% for the lowest reading in more than a year. Five-year inflation expectations were unchanged at 3%.
The current conditions index also rose to 60.2, a 2.4% gain from November.
Stocks trimmed losses following the report.
—Jeff Cox
Utilities was the only S&P 500 sector on pace for weekly gains.
The sector last traded 0.3% higher for the week at around 9:55 a.m. ET. It was boosted by gains from names like Evergy, American Electric Power and CMS Energy.
— Samantha Subin
Stocks opened lower Friday.
The Dow Jones Industrial Average fell 111 points, or 0.3%. The S&P 500 and Nasdaq Composite shed 0.5% and 0.7%, respectively.
— Samantha Subin