GDP Revision Shock, Sticky Inflation Fan Stagflation Fears: What's Moving Markets Friday?

U.S. equities traded in mixed territory Friday morning as Wall Street weighed a stark downward revision to fourth-quarter economic growth against a sticky inflation reading prior to the oil shock of the war in Iran.

• State Street Consumer Staples Select Sector SPDR ETF stock is taking a breather. Where are XLP shares going?

The Bureau of Economic Analysis revised fourth-quarter 2025 GDP growth to 0.7% annualized, down 0.7 percentage points from its advance estimate.

The January Core Personal Consumption Expenditure (PCE) price index — the Fed’s favorite inflation gauge — showed 3.1% annual increase, up from the previous 3%. The data marks a further departure from the Fed’s 2% target.

Weakening growth alongside persistent inflation — amplified by University of Michigan survey data showing rising price expectations since the Iran-U.S. conflict began — is reigniting stagflation fears.

On the oil market front, Washington temporarily eased sanctions on Russian crude to expand global supply, but Iran-U.S. tensions continued to threaten Persian Gulf energy flows and kept crude prices elevated.

The West Texas Intermediate held near $95 a barrel, broadly unchanged for the day. Meanwhile, Brent crude returned above $100 a barrel.

By midday in New York, the Dow Jones Industrial Average rose 0.3% to 46,820, the S&P 500 held essentially flat at 6,670 and the Nasdaq 100 was little changed at 24,530. The Russell 2000 edged down 0.1% to 2,490.

Eight of 11 S&P 500 sectors traded in positive territory. The Utilities Select Sector SPDR Fund (NYSE:XLU) outperformed all peers, rising 1.2%, while the Financial Select Sector SPDR Fund (NYSE:XLF) gained 0.8% and the Consumer Staples Select Sector SPDR Fund (NYSE:XLP) added 0.7%. The Materials Select Sector SPDR Fund (NYSE:XLB) lagged, falling 0.2%,

The 10-year U.S. Treasury yield held at 4.26% and the 30-year note yielded 4.88%. The euro fell 0.5% against the dollar to 1.1450 and the British pound dropped 0.7% to 1.3250.

Bitcoin (CRYPTO: BTC) climbed 3.2% to $72,405, outperforming traditional risk assets.

Friday’s Performance In Major U.S. Indices

Major Indices	Price	% Change
Nasdaq 100	24,535.91	0.0%
S&P 500	6,674.45	0.0%
Dow Jones	46,818.08	+0.3%
Russell 2000	2,487.39	-0.1%

According to Benzinga Pro data:

• The Vanguard S&P 500 ETF (NYSE:VOO) rose 0.03%.
• The SPDR Dow Jones Industrial Average (NYSE:DIA) rose 0.30%.
• The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) rallied 0.01%.
• The iShares Russell 2000 ETF (NYSE:IWM) traded 0.06% lower.

Earnings Movers

Ulta Beauty, Inc. (NASDAQ:ULTA) beat fourth quarter EPS estimates of $7.15 with an $8.01 print and topped revenue forecasts with $3.9 billion in sales, but cut its FY2027 net sales growth guidance to 6%-7%, citing a consumer pullback in discretionary beauty spending. Shares sank 11.3%.

Adobe Inc. (NASDAQ:ADBE) posted record first-quarter revenue of $6.4 billion and EPS of $6.06, topping the $5.87 consensus, but conservative second-quarter guidance and the surprise announcement that CEO Shantanu Narayen will step down sent shares down 6.4%.

Lennar Corporation (NYSE:LEN) missed on both first-quarter EPS (88 cents vs. the 96 cents estimate) and revenue ($6.61 billion versus the $6.88 billion estimate). Despite the double miss, the stock rose 2% as management highlighted ongoing production and operating improvements.

Russell 1000’s Top 5 Gainers And Losers On Friday

Stock Name	% Change
Summit Therapeutics Inc. (NASDAQ:SMMT)	+6.80%
International Paper Company (NYSE:IP)	+6.08%
Fermi Inc. (NASDAQ:FRMI)	+5.62%
Wingstop Inc. (NASDAQ:WING)	+5.46%
Ares Management Corporation (NYSE:ARES)	+5.31%

Stock Name	% Change
Ulta Beauty, Inc.	-11.30%
AngloGold Ashanti plc (NYSE:AU)	-7.67%
Credit Acceptance Corporation (NASDAQ:CACC)	-6.65%
Adobe Inc.	-6.39%
Hexcel Corporation (NYSE:HXL)	-6.30%

Photo: SkazovD via Shutterstock