NEW YORK (AP) — U.S. stocks are drifting on Friday after discouraging reports showing a combination of slowing growth for the economy and faster inflation created relatively few ripples in the market.
The S&P 500 fell 0.2% and is close to dropping to a third straight losing week. The Dow Jones Industrial Average was down 175 points, or 0.4%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.1% lower.
Treasury yields also did not move much in the bond market following the economic reports. While they were disappointing and underscored the tricky situation the Federal Reserve may be facing as it sets interest rates, the reports did not change traders’ expectations much for what the Fed will ultimately do.
One report said that the U.S. economy’s growth slowed to a 1.4% annual rate during the end of 2025. That’s down from a 4.4% burst during the summer and “a bummer of a number,” according to Brian Jacobsen, chief economic strategist at Annex Wealth Management.
A second report said the measure of inflation that the Fed likes to use accelerated to 2.9% in December from 2.8% in November. An underlying measure that economists consider a better predictor of where inflation may be heading quickened to 3% from 2.8%.
The Fed could lower rates to give the economy a boost, as it did last year and as President Donald Trump has been demanding, but that would risk worsening inflation. Fed officials said at their last meeting that they want to see inflation fall further before they would support cutting rates further.
Following the reports, traders are still mostly betting that the Fed will lower rates at least twice by the end of this year, according to data from CME Group. But some shifted the timing for when the cuts could begin to slightly later in the summer.
The yield on the 10-year Treasury edged down to 4.07% from 4.08% late Thursday. The two-year yield, which more closely tracks expectations for Fed action, held at 3.47%.
On Wall Street, Akamai Technologies helped lead the market lower after falling 10.1%. The cybersecurity and cloud computing company reported stronger results for the end of 2025 than analysts expected, but it gave a profit forecast for the upcoming year that fell short of estimates.
Akamai plans to spend a bigger percentage of its revenue this upcoming year on equipment and other investments. It’s the latest potential indicator of how higher prices for computer memory amid shortages created by the AI boom is affecting customers throughout the economy.
That helped offset a 5.6% gain for Comfort Systems after the provider of heating, ventilation air conditioning and electrical services reported a stronger profit for the latest quarter than analysts expected. CEO Brian Lane said his company is seeing “unprecedented demand.”
In stock markets abroad, indexes rose modestly in Europe following a more mixed finish in Asia.
The Hang Seng fell 1.1% after Hong Kong’s market reopened following Lunar New Year holidays, but South Korea’s Kospi jumped 2.3% to a record, led by major defense contractors like Hanwha Aerospace, whose shares soared 8.1%. The company is one of many benefiting from a ramp up in military spending in many countries.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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