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Inflation fears hit Wall Street ahead of Fed meeting

The S&P 500 fell on Friday, marking its second-straight weekly loss, as weak technology stocks, inflation concerns, higher interest rates, and the upcoming Fed meeting weighed heavily on investors.

The index lost 0.65% to close at 5,117.09 on Friday, while the Dow fell 190.89 points, or 0.49%, to finish the week at 38,714.77, and the Nasdaq dropped nearly 1% to 15,973.17.

For the week, the S&P 500 shed 0.13%, the Dow dropped 0.02%, and the Nasdaq slipped 0.7%, despite reaching new highs earlier in the week.

Tech shares struggled, with Amazon and Microsoft losing around 2%, Nvidia shares only edging 0.4% higher for the week, and Apple and Alphabet also losing ground.

Persistent inflation worries, coupled with anticipation for the Fed meeting, troubled US investors, causing the yield on the 10-year Treasury bond to surge 22 points to around 4.32% at the close.

Adding to the concerns was news of a potentially significant court case settlement that could reshape the US housing industry.

US markets, after months of resistance, no longer anticipate a rate cut from the Fed this week, with June or July now seeming more likely. Talk of multiple rate cuts has disappeared as inflation data remains stubbornly high.

US-listed copper companies performed well on news of planned production cuts by China’s smelting and refining sector. Shares of Freeport McMoRan rose 14%, Southern Copper shares were up more than 19%, and Grupo Mexica SAB de CV surged nearly 17%.

Meanwhile, Europe’s STOXX 600 rose 0.7%, and Chinese shares increased 0.7%, despite gloomy news about the property market. Japanese shares, however, fell 2.5% on fears of potential monetary policy tightening by the Bank of Japan, which may end its negative interest rate regime.

The Nikkei closed at 38,707.49 points on Friday, far from its recent record of 40,472.11, indicating nervousness about the impending policy shift by the Bank of Japan.