The Dow Jones Industrial Average managed to close higher on Friday, wrapping up the week with a marginal gain. However, concerns about inflation and a rise in Treasury yields dampened investor confidence in the Federal Reserve’s intentions regarding rate hikes later this year.

The Dow Jones Industrial Average saw a modest rise of 0.3%, translating to a gain of 105 points. In contrast, the Nasdaq experienced a dip of 0.6%, and the S&P 500 recorded a slight decline of 0.1%.

Wholesale Inflation and its Impact on Rate Hike Speculations

The Producer Price Index (PPI) for final demand, a key indicator of wholesale inflation, saw an uptick of 0.3% in July. This exceeded economists’ expectations, who had predicted a 0.2% increase. This increase comes after a more modest pace of 0.1% in June. Over the past 12 months leading up to July, the PPI rose by 2.4%, slightly surpassing the estimated 2.3%.

Stifel, a reputable financial services company, commented on the situation, noting that the recent PPI data, combined with the rise in the Consumer Price Index (CPI) the previous day, has deflated market hopes that the Federal Reserve will remain on the sidelines in September. The optimism that the Fed might refrain from further rate hikes seems to have been curtailed by these economic indicators.

Impact on Treasury Yields

The concern over the possibility of future rate hikes had an impact on Treasury yields, which climbed higher. The notion that the Fed’s recent rate increase might not have been the last one led to the 10-year Treasury yield edging closer to its October peak of 5.12%.

Tech Sector and Chip Stocks React

The tech sector faced challenges, particularly for prominent companies except Apple Inc (NASDAQ:AAPL). Meta Platforms Inc (NASDAQ:META) was one of the companies that contributed to the sector’s decline, experiencing a drop of over 1%.

Challenges in the chip stocks segment also weighed on the tech sector. NVIDIA Corporation (NASDAQ:NVDA) experienced a 3% decline, as the chipmaker grapples to maintain its valuation of $1 trillion.

However, some experts on Wall Street still hold optimism for the semiconductor sector. Recent earnings reports from chip foundries, memory companies, and other major chip manufacturers have instilled confidence in an ongoing recovery.

Nomura, a well-respected financial institution, expressed this sentiment, stating that the succession of positive earnings reports from chip-related companies suggests a continued recovery in the chip industry in the coming months.

NewsCorp Beats Earnings Expectations

News Corp (NASDAQ:NWSA) announced its fiscal fourth-quarter earnings, surpassing Wall Street estimates. The news drove the company’s shares up by more than 4%. However, the company’s revenue fell short of expectations due to challenges faced by its book publishing and digital real estate services divisions. The latter suffered due to adverse conditions in the housing markets in the United States and Australia.

In conclusion, despite a mixed bag of economic indicators and sector-specific challenges, the Dow managed to secure a weekly gain. However, lingering concerns about inflation and the potential for future rate hikes by the Federal Reserve continue to influence investor sentiment and market movements.