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Investing.com – The S&P 500 struggled for direction Friday as a rebound in oil prices put inflation back in the spotlight at a time when data pointing to a pinched consumer and worries about aggressive Federal Reserve remain front and center.
The S&P 500 fell 0.2%, the Dow Jones Industrial Average gained 0.2%, or 72 points, the Nasdaq fell 0.42%.
Oil prices cut losses to turn positive on fresh worries over supply disruptions following reports that Iran-backed Houthi missile hit an Aramco (SE:2222) oil facility in Saudi Arabia.
Rising tensions in the Middle East arrived just as supply fears were easing after the EU failed to reach consensus on joining the U.S. in banning imports of Russian oil.
“This averts concerns about a further tightening of supply for the time being,” Commerzbank said in a note early Friday.
Rising oil prices kept fears of hotter for longer inflation front and center at time when consumers are feeling the pinch from rising prices.
The University of Michigan’s sentiment index showed U.S. consumer sentiment deteriorated further in late March, falling to a reading of 59.4 from 59.7 earlier in the month.
The pace of red-hot inflation has forced the Federal Reserve to turn more aggressive in recent weeks, prompting Wall Street to ramp-up their bets on the Fed delivering 50-basis points rate hikes at upcoming meetings.
“We now look for the Fed to raise rates by 50bp at both its May and June meetings, with 25bp rate hikes penciled in for each meeting over the balance of the year,” {{|Morgan Stanley said in a note}}.
U.S. Treasury yields added to recent gains, with the 10-year yield topping 2.5% for the first time in nearly three years.
Banking stocks, which benefit from a rising rate environment boosting returns on the loan products, were up sharply
Comerica (NYSE:CMA), Zions (NASDAQ:ZION), and Lincoln National (NYSE:LNC) led the gains.
Other cyclical concerns of the market also played a role in keeping the downside in check, with industrials underpinned by an ALK-led move higher in airline stocks.
Alaska Air Group (NYSE:ALK) rose more than 3% after Bank of America backed the airline’s financial outlook, saying it was confident the low-cost airline can top the prior high single digit pre-tax margin expectation and reach its new long term target of 11% to 13%.
In big tech, meanwhile, Apple (NASDAQ:AAPL) Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:FB) traded mixed.
In other news, cannabis stocks surged, led by Tilray (NASDAQ:TLRY) and Aurora Cannabis (NASDAQ:ACB) as the House of Representatives is set to vote on a bill to federally legalize marijuana next week. A version of the bill previously passed the House in December 2020, but failed to advance in the Senate.
