Stocks finished lower Friday after surging inflation led to an unexpected decline in U.S. consumer sentiment in early July.
The Dow Jones Industrial Average ended down 299 points, or 0.86%, to 34,687, the S&P 500 declined 0.75% and the Nasdaq fell 0.8%.
For the week, the Dow fell 0.5%, the S&P 500 declined 1% and the Nasdaq dropped 1.9%.
Consumer sentiment, according to the University of Michigan survey, fell to 80.8 in early July, a five-month low, and down from 85.5 during the previous month. The media projection of economists, according to Bloomberg, was 86.5.
“Inflation has put added pressure on living standards, especially on lower and middle income households, and caused postponement of large discretionary purchases, especially among upper income households,” said Richard Curtin, the survey's director.
Stocks had opened stronger on Friday after retail sales rose more than expected and investors weighed Federal Reserve Chairman Jerome Powell's repeated assurances that rising price pressures will only be temporary.
Retail sales in the U.S. during June rose unexpectedly, jumping 0.6% when economists were calling for a decline of 0.3%.
"The unexpected rise in retail sales combined with (Thursday's) pandemic-era low of jobless claims are two more strong proof points that we are edging closer to a full economic recovery," said Mike Loewengart, managing director of investment strategy at E-Trade.
"While we are seeing consumers broadly look more towards services and activities, the expectations that people would be turning away from goods seems to have been a little overblown."
The yield on the benchmark 10-year Treasury rose Friday to 1.3%, trimming its third weekly decline.
Stocks finished Thursday's session mostly lower following comments from Powell that the inflation surge the U.S. was experiencing as it recovers from the pandemic will ease or reverse over time.
He told lawmakers in a second day of testimony that this "particular inflation is just unique in history.
“We don’t have another example of the last time we reopened a $20 trillion economy. We’re humble about what we understand,” the Fed chief said Thursday before the Senate Banking, Housing and Urban Affairs Committee.
Optimism about the economic recovery, however, has been tempered this week by concern that growth could stall as variants of the COVID-19 virus spread.
Treasury Secretary Janet Yellen cautioned late Thursday in an interview with CNBC that she was concerned with the ongoing rise in delta-variant coronavirus infections in major economies around the world.
Yellen also said the U.S. could see "several more months of rapid inflation" before price pressures ease into the start of next year.
Intel (INTC) fell 1.5% Friday following a report that said it was exploring an acquisition of GlobalFoundries. Such a deal would boost the semiconductor company's plans to make more chips for other tech companies.
The acquisition could be valued at $30 billion and would rank as Intel's largest acquisition ever, according to The Wall Street Journal.