Stocks end lower, S&P 500 snaps five straight weeks of gains

What drove markets

U.S. stocks closed lower Friday, with the S&P 500 snapping five straight weeks of gains.

The market’s stability despite this week’s “nerve-racking inflation data” and “hawkish” commentary from Federal Reserve officials  is “remarkable,” said Mark Hackett, Nationwide’s chief of investment research, by phone Friday. “At some point, we’re going to get a reminder that it’s not this easy.”

The S&P 500 is up almost 5% so far this year despite slipping Friday afternoon, according to FactSet data, at last check.

The stock market appears resilient in the face of hotter-than-anticipated inflation readings this week because of “continued strong earnings” as companies roll out their fourth-quarter results, said David Waddell, chief executive and chief investment strategist at Waddell & Associates, in a phone interview Friday. Fourth-quarter earnings have come in “a lot better than expected,” he said.

And although U.S. inflation in January, as measured by the consumer-price index and producer-price index, was stronger than Wall Street expected, Waddell noted that “the trend is lower.”

Data from the producer-price index showed wholesale prices rose 0.3% last month, according to a report Friday from the Bureau of Labor Statistics. That was the biggest increase in five months and surpassed economists’ expectations for a 0.1% uptick.

Core wholesale prices, which exclude food, energy and trade margins, saw an even bigger rise in January, climbing 0.6% for the largest monthly jump in a year.

Stocks stumbled Friday as Treasury yields rose on the PPI inflation report. The rate on the 10-year Treasury note
BX:TMUBMUSD10Y
increased more than 5 basis points to 4.294%, according to Dow Jones Market Data.

Read: Fed’s Daly says patience is needed to finish the job on inflation

In other economic news, investors digested fresh data on housing starts, which showed the construction of new homes fell 14.8% in January as home builders scaled back new projects.

Also, a gauge of preliminary consumer sentiment from the University of Michigan for February ticked higher to 79.6 from 79 last month.

Strong earnings reports helped boost certain stocks, as shares of Applied Materials Inc.
AMAT,
+6.35%
jumped after the chip-equipment company delivered upbeat results and guidance after Thursday’s close.

The S&P 500’s technology sector was down on Friday afternoon, although megacap stock Nvidia Corp.
NVDA,
-0.06%
was in the green, according to FactSet data, at last check. Nvidia will report its quarterly earnings next week on Feb. 21.

With 79% of companies in the S&P 500 having reported fourth-quarter earnings so far, 75% of them have reported a “positive” surprise in their earnings per share, according to a note Friday from FactSet’s senior earnings analyst John Butters. That’s “below the 5-year average of 77% but above the 10-year average of 74%.”

Meanwhile, Friday marked the monthly options expiration for single-stock and index options, which some derivatives-market analysts said could lead to a more volatile session.

See: Is the stock market open on Presidents Day? Will the post office deliver mail?

Barbara Kollmeyer contributed to this article.