U.S. stocks declined on Friday as investors gear up to face higher interest rates following comments from Federal Reserve and European Central Bank officials.
S&P futures fell by 0.8%, while contracts on the Nasdaq 100 and the Dow Jones Industrial Average fell by 1.1% and 0.6% respectively. European stocks also declined following the statements, with the Stoxx Europe 600 declining by 0.7%.
The U.S. dollar strengthened on Friday, with the Bloomberg dollar gauge rising by 0.6%, erasing its losses for the year in the process. As a result, the euro slipped 0.4% to $1.0636 while the sterling fell 0.4% to $1.1936. Following Thursday’s rally, Bitcoin slipped 3.1% to $23,765.46 while Ether fell by 1.1% to $1,664.27.
Federal Reserve officials remain convinced that interest rates will have to remain steep for a longer term than expected, with Federal Reserve Bank of Cleveland President Loretta Mester stating that a compelling case for a 50 basis point hike had been made.
“It’s taken a lot but it would appear investors’ eternal optimism is being shaken, with the latest PPI figures finally driving the message home that bringing the economy in for a soft landing will be extraordinarily challenging and there’ll likely be plenty of turbulence along the way,” Craig Erlam, senior market analyst at Oanda Europe observed.