Stocks fall on possibility of 75-basis-point Fed rate hike

Yahoo Finance's Ines Ferré breaks down how stocks are moving near the close of the week, consumer sentiment, and ExxonMobil's market cap nearing that of Meta.

Video transcript

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JARED BLIKRE: And let's take a look at the action in the market today. It is a down day and a down week in the market. We see the Dow off about 1% there. S&P 500 up-- or down just a little bit less than the NASDAQ, down 1% as well.

Let's check out the five-day view. Look at-- looking like options expiration sending the markets down to 7.28%, plus a lot of other factors that we're going to be discussing. And here's the sector action for today. Real quickly, it looks like everything is in the red, to the downside.

Industrials, energy, and materials, they are leading the way down. So that is a story on the dollar, which we have also been tracking. And here's the 10-year T note yield. It is down 3 basis points.

And let's take a look at the market with Yahoo Finance's Ines Ferré. Now, you've been tracking consumer sentiment data and came in a little bit underneath expectations today. And this is one of those reports we get a handle on the consumer, but also their inflation expectations. And that's key right here.

INES FERRE: Yeah, that's right. And that was the key point of that University of Michigan Consumer Sentiment report that came out. Inflation expectations dropping just a little bit, the 5 to 10-year expectation for inflation. As far as the consumer sentiment, you see the numbers right there, coming in at 59.5. And what economists had been expecting was a reading of 60.

Now, if you compare that to the month prior, the month prior, the reading came in at 58.2. So you are seeing-- or the previous reading, I should say, you are seeing from the previous reading to this one a little bit of an uptick there as far as consumer sentiment is concerned. And that may be because of energy prices, which have come down. But what did we see, really, this week? We saw that--

JARED BLIKRE: Like, carnage--

INES FERRE: Yes.

JARED BLIKRE: --on Tuesday, I think it was. But, yes

INES FERRE: It was Tuesday when we saw that hotter-than-expected CPI print. And really what we saw also was a core CPI being very sticky when it comes to sectors like shelter. That indicates that the Fed is going to have to-- it has a runway to keep going aggressively to try and bring that stickiness in shelter rent down. And they do that through the labor market.

Speaking of the labor market, we also, on Thursday, got the jobless claims. Those came in with a fall for a fifth consecutive week, so that indicates that the labor market is still hot. So the Fed has room to go after that labor market. And the expectations are that for next week, a 75 basis point hike is what's expected.

JARED BLIKRE: Yes, and 100 basis points has been priced in, I think. It's non-zero, and I think that's the important part. Probably not going to happen, but the fact that it's even being considered right now is important. Now, I'm looking at the YFI Interactive, and I have our five-day lookup. And just looking, this is a bad week.

All right, tech in the lower right, that's XLK, that is down 7%. So is real estate. XLB, well, that's materials. That's a story on the stronger dollar. Communication services, guess what that has? Meta.

We've been talking about that along with a lot of other tickers, but also industrials. So kind of a broad swath of tickers here taking it on the chin. And those mega caps really getting hit as well, Ines.

INES FERRE: Yeah, completely. And you mentioned Meta, and that's part of communications services. And if you take a look at ExxonMobil, that market cap compared to Meta's market cap, ExxonMobil is inching towards Meta's market cap. So Meta is on pace for its lowest close since January of 2019. Year-to-date, the stock is down significantly. And there you go, Jared.

JARED BLIKRE: There we go.

INES FERRE: You're outlining it right there. Did you think-- when oil prices had gone negative back in 2020, did you think that you would see ExxonMobil mirroring Meta's market cap?

JARED BLIKRE: That is a great question and a great observation there. Back in the 1980s-- I guess I was born back then, but I wasn't following the markets-- Exxon was the biggest stock in the world for a while. And, in fact, it had a resurgence.

When we saw everything get beaten down in the global financial crisis, Exxon was the biggest stock in the world for a while. Guess what? In 2013, it was overtaken by Apple. So we'll have to see if Exxon can overcome Meta. You know, be interesting to see if that happens.

INES FERRE: It sure is. And every analyst I've spoken to is still pretty bullish on energy. So--

JARED BLIKRE: It's been-- it's been the best-performing sector of the year by a mile, something like 45%. All right. Thank you for that. Yahoo Finance's Ines Ferré.