On Friday, the S&P 500 ended lower, dragged down by Microsoft and Nvidia, as investors worried that inflation and a strong US economy could prompt the Federal Reserve to accelerate the pace of interest rate hikes.

Economic data this week showed rising inflation, a solid job market and resilience in consumer spending, giving the Fed more room to raise borrowing costs.

Goldman Sachs and BofA expect three more rate hikes this year, of 0.25 percentage points each, up from their previous prediction of two hikes.

Traders are pricing in at least two more rate hikes and see Fed rates peaking at 5.3% in July as the central bank tries to cool the economy and lower inflation.

Microsoft Corp fell 1.6%, and Nvidia fell 2.8% as the 10-year US Treasury yield hit a three-month high, weighing on the S&P 500.

The CBOE Volatility Index, also known as Wall Street’s fear gauge, was above 20 for the second straight session.

Six of the 11 S&P 500 sectors rose, led by a 1.29% gain in consumer staples and a 1% gain in utilities. Energy stocks fell 3.65%, with Exxon Mobil down 3.8%.

The S&P 500 fell 0.28% to close at 4,079.09. The Nasdaq fell 0.58% to 11,787.27, while the Dow Jones Industrial Average rose 0.39% to 33,826.69.

For the week, the S&P 500 lost 0.3%, the Dow lost 0.1%, and the Nasdaq rose 0.6%. The S&P 500 is up about 6% in 2023, while the Nasdaq has rebounded about 13% after last year’s sharp decline.

Adding to recent concerns about monetary policy, Fed Governor Michelle Bowman said the central bank needs to keep raising rates until it makes more progress in tackling inflation. Richmond Fed President Thomas Barkin said the central bank still needs to raise rates but will likely stick with a 25 basis point increase.

Moderna Inc fell 3.3% after its experimental influenza vaccine based on messenger RNA showed mixed results in a study.

Shares of Deere & Co. soared 7.5% after the world’s largest farm equipment maker boosted annual profit and topped quarterly earnings estimates.

Lithium miners Livent Corp, Albemarle Corp and Piedmont Lithium Inc fell between 10% and 12% on concerns about weaker prices for the metal for electric vehicle batteries in China.

Tesla Inc was the most traded company on the S&P 500, with $42.9 billion in shares traded during the session. The stock rose 3.1%.

US stock markets will be closed on Monday for Presidents’ Day. Advancers outnumbered decliners in the S&P 500 by 1.1 to 1.

The S&P 500 recorded eight new highs and one new low; the Nasdaq recorded 75 new highs and 68 new lows.

Volume on US exchanges was relatively light, with 10.6 billion shares changing hands compared with the 11.7 billion average for the previous 20 sessions.