S&P, Dow, Nasdaq set to end week lower as post-Fed selloff continues
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U.S. stocks edged lower for the third straight session on Friday as recession fears continued to keep bulls at bay. All three major indices are on track to post their second week of losses.
The benchmark S&P 500 (SP500) fell 1.6%, while the Dow (DJI) and Nasdaq Composite (COMP.IND) dipped 1.4% each. The indices are set to end the week more than 2% lower.
Fears of a recession next year have been fueled by the increasingly hawkish tone of the Federal Reserve as well as other major central banks. San Francisco Fed President Mary Daly said the Fed still has "long way to go" to get inflation down to 2%.
"The first punch from the Fed didn't really land on markets, but the second punch from the ECB did," Deutsche Bank Jim Reid said. For "the time being, investors still have confidence that central bankers arenât going to let longer-term inflation get out of control."
All 11 S&P 500 sectors were trading in the red, led by real estate and utilities stocks. 
Morgan Stanley expects market focus to turn away from inflation and the Fed to focus more on corporate earnings, predicting that earnings could come in 15-20% lower than expectations. 
"With an expected sharp downward revision to earnings, the main indices will have to adjust their valuations down sharply too. Based on history, there's still plenty of bad action ahead before we can start looking for a market bottom," Seeking Alpha contributor The Macro Teller cautioned.
Meanwhile, the 10-year Treasury yield (US10Y) rose 2 bps to 3.47% and the 2-year yield (US2Y) was down 8 bps at 4.17%.
On the economic data front, the S&P Global composite PMI came in lower than expected in December as business activity fell at the joint-sharpest rate since May 2020.
Among active stocks, Adobe (ADBE) gained after providing strong guidance, while Accenture (ACN) fell after reporting earnings.