U.S. equities fell in February as investors weighed just how high the Federal Reserve will push benchmark interest rates to curb inflation, which may be on the upswing again.
The S&P 500 closed the month down 2.6%, while the Dow Jones Industrial Average dropped 4.2%. The smaller-cap Russell 2000 also closed in the red, falling 1.8% for the month.
Markets are betting that the Fed has more rate hikes planned in 2023, as the latest reading on inflation landed higher than expected. The central bank is trying to tame rising prices as rental rates and the cost of other services, including vehicle repairs and airfare, continue to increase.
Sector performance
Energy stocks were hit particularly hard in February, with the S&P 500 Energy index tumbling 7.6%. The S&P 500 Utilities and S&P 500 Real Estate indexes followed next, down 6.4% and 6.1%, respectively.
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The S&P 500 Information Technology index was the sole sector index to close in the black, up a slight 0.3%.
Largest gains, drops in February
Communications company Lumen Technologies Inc. recorded the largest decline in February among all S&P 500 stocks, down 35.2% after the company issued lower-than-anticipated guidance for 2023 earnings.
Dating-focused Match Group Inc. and pharmaceutical company Moderna Inc. were the next-worst performers, with declines of 23.5% and 21.2%, respectively.
Meanwhile, pharmaceuticals company Catalent Inc. logged the highest increase in February, soaring 27.4%. Catalent's share price spiked 19.5% on Feb. 6 after Danaher Corp. was reported to be interested in purchasing the company.
Healthcare-focused West Pharmaceutical Services Inc. and computer graphics-oriented NVIDIA Corp. rounded out the top three best-performing stocks in February, with gains of 19.4% and 18.8%, respectively.
Electric car manufacturer Tesla Inc. was the most-traded stock in the S&P 500 for the month, with an average daily volume of more than 191 million, or roughly 6% of its shares outstanding. Tesla's share price climbed 18.8% during the month, the fourth-largest increase of any S&P 500 stock.
