US benchmark equity indexes closed mixed Friday as markets awaited the Federal Reserve‘s monetary policy decision scheduled for next Wednesday.
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The Dow Jones Industrial Average was little changed at 35,227.7 and the S&P 500 was steady at 4,536.3. The Nasdaq Composite fell 0.2% to 14,032.8. Among sectors, utilities led the gainers, followed by health care. Communication services and industrials posted the steepest declines.
For the week, the Dow rose 2.1%, while the S&P 500 advanced 0.7%. The Nasdaq slipped 0.6%.
Markets are currently pricing in a nearly 100% probability that the Federal Open Market Committee will increase its benchmark lending rate by 25 basis points Wednesday, according to the CME FedWatch Tool.
Following 10 consecutive increases, the FOMC left its benchmark interest rate unchanged at 5% to 5.25% in June, saying the move would allow it “to assess additional information and its implications for monetary policy” amid high inflation.
A rate increase by the FOMC next week is likely to be the last of the current tightening cycle, Goldman Sachs said in a note. The firm expects Fed Chair Jerome Powell to “cautiously avoid implying that the FOMC has already reached an agreement but are confident that he does want to slow the pace and that the FOMC will end up skipping in September,” Goldman said.
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The firm projects rate cuts to begin in the second quarter next year and proceed at 25-basis-points per quarter, ending with the federal funds rate at 3% to 3.25%, according to the note.
The US 10-year yield fell 1.7 basis points to 3.84% Friday, while the two-year rate rose one basis point to 4.85%. West Texas Intermediate crude oil gained 1.7% to $76.93 per barrel Friday.
In company news, Merck (MRK) shares rose 1.8%, the second-biggest gain on the Dow, after the drugmaker said the European Medicines Agency’s Committee for Medicinal Products for Human Use recommended approval of Keytruda, in combination with trastuzumab and chemotherapy, for gastric cancer treatment.
Separately, the company said the committee recommended the approval of gefapixant to treat adults with refractory or unexplained chronic cough.
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Interpublic Group (IPG) shares slumped nearly 13%, the biggest drop on the S&P 500, after the company reported lower second-quarter revenue from last year.
Gold fell 0.3% to $1,964.40 per troy ounce, while silver dropped 0.7% to $24.79 per ounce.
