On Friday, the S&P 500 decreased in value, which was mainly caused by Microsoft and Nvidia. This decline was due to investor concerns about inflation and the strength of U.S. economy, which could lead the Federal Reserve implementing more interest rate increases. Throughout the week, economic data revealed high inflation rates, a tight job market, and stable consumer spending, which allowed the Fed to consider raising borrowing costs further. According to Goldman Sachs and Bank of America, there could be three interest rate hikes this year, each by 0.25%, up from their previous prediction of two rate increases.

Fed Governor Michelle Bowman has contributed to existing concerns regarding monetary policy by stating that the central bank will have to continue raising interest rates until it effectively addresses inflation. Richmond Fed President Thomas Barkin has also stated that the central bank must still raise interest rates but has suggested that it could stick to quarter-point increases.

On Friday, European stock markets experienced a decline in response to the drop in Wall Street, which was due to concerns that central banks will continue to enforce aggressive monetary tightening. The corporate earnings season also contributed to this trend. Inflation remains problematic in Europe, as German producer prices decreased by 1.0% in January, but still increased by 17.8% annually, exceeding the expected 16.4% rise.

Investors were hoping for indications of when interest rate hikes by central banks would end, but the recent hawkish comments have increased worries about global growth prospects. Despite this, there was some good news, as U.K. retail sales increased by 0.5% in January, a significant improvement from the previous month’s 1.2% decline and the anticipated 0.3% decrease.

Oil prices decreased and experienced a weekly loss due to worries that increasing interest rates will lead to a recession in the United States, which is the world’s largest consumer of crude oil. Moreover, the U.S. dollar has risen to a six-week high, making oil more costly for foreign purchasers since it is denominated in dollars. The oil market has recently been unstable as traders balance concerns about an economic slowdown in the United States against hopes for an increase in demand in China, the leading oil importer globally.