By Sinéad Carew and Johann M Cherian
(Reuters) – Wall Street’s main indexes closed lower on Friday as investors stepped back while they digested a mixed bag of economic data and earnings reports and prepared for a week filled with economic releases and a Federal Reserve meeting.
The technology sector was the biggest drag on the market as megacap stocks, including artificial intelligence chip leader Nvidia, reversed a sharp rally earlier in the week.
The housing market data was hotter than expected, while an S&P Global survey showed business activity slowing to a nine-month low in January as prices rose. However, firms reported increased hiring, supporting the Federal Reserve’s cautious approach to monetary policy this year.
The University of Michigan’s final estimate on consumer sentiment dropped to 71.1 from a previous estimate of 73.2.
At the end of a relatively light week for data, traders were betting the Fed would keep borrowing costs unchanged at its Jan. 28-29 meeting and expect its first rate cut in June, the latest data from CME Group’s FedWatch tool showed.
“It really boils down to some mixed economics and earnings news,” said Scott Helfstein, head of investment strategy at ETF company Global X.
Investors are bracing for next week’s slew of key inflation and economic growth data as well as the Fed meeting, while waiting for policy updates from the Trump administration.
“There is anticipation of a really big news week ahead. And there is lingering policy uncertainty with the new administration’s first week on the job, which is likely to persist for the next few weeks,” he said.
Investors worry that U.S. President Donald Trump’s proposed tariffs could exacerbate inflationary pressures and slow Fed rate cuts, after he referred to trade policy multiple times this week without providing concrete details of his plans.
Trump has said tariffs on Mexico, Canada, China and the European Union could be announced on Feb. 1, but analysts say major plans could be announced on April 1.
The Dow Jones Industrial Average fell 140.82 points, or 0.32%, to 44,424.25, the S&P 500 lost 17.47 points, or 0.29%, to 6,101.24 and the Nasdaq Composite lost 99.38 points, or 0.50%, to 19,954.30.
The indexes advanced for the second week in a row, with the S&P 500 up 1.74%, while the Nasdaq rose 1.65% and the Dow climbed 2.15%.
Six of the 11 S&P 500 industry sectors rose, with communications services up 1.09% to lead gains, just ahead of utilities, which rose 1.07%.
Utilities’ biggest advancer, NextEra Energy Inc, rose about 5.2% and was also the S&P 500’s biggest gainer on the day.
