By Yasin Ebrahim

Investing.com – The S&P 500 gave up intraday gains Friday, to remain on course for its another weekly loss amid rising concerns about the strength of the consumer in the wake of the Russia-Ukraine war and expectations for the Federal Reserve to begin its tightening cycle next week.

It fell by 0.6%. Or 43 points.

As investors analyzed data, they saw a decline in consumer discretionary stocks as investors listened to information pointing towards a shift in consumer sentiment after surging inflation. This was a result of the Russia-Ukraine War which escalated inflation to an even higher level.  

Tesla (NASDAQ) Las Vegas Sands (NYSE:), Etsy Inc The losses in discretionary consumer stocks (NASDAQ:), were led by (NASDAQ:), with these falling more than 9%.

The March University of Michigan Consumer Sentiment Index, which has a negative correlation with inflation, dropped to 59.7, from 62.8. This is the lowest point since September 2011.

“This latest leg down [in the survey] surely reflects the recent spike in gasoline prices since the beginning of the Russia-Ukraine war,” Jefferies said in a note.

Signs of weakness among consumers, which are a key driver for economic growth, overshadow the growing hopes of Ukraine-Russian agreement on a cessefire. After Russian President Vladimir Putin reported positive developments in peace negotiations with Ukraine, this report was reportedly backed by Russia.

President Joe Biden continued to up the ante on Moscow, calling on lawmakers to revoke Russia’s “most favored nation” status, which could end normal trade with Russia, leading to higher tariffs.

The sector’s gains in technology a day before were short-lived, as it resumed its decline. The biggest losers in tech were Apple (NASDAQ) and Meta Platforms.

Meta was also pressured by concerns that user growth could slow even further after Russia restricted access to the social media giant’s Instagram platform and launched a criminal probe in the company.

The investigation was opened after the social media giant changed its policy on hate speech to allow statements such as “death to Russian invaders” on its platforms.

The weakness in the broader market comes just a week ahead of the Federal Reserve’s two-day meeting, which gets underway on March 15.

Jerome Powell, Federal Reserve Chairman, has supported a quarter-point rate increase and indicated that talks would be initiated by the Fed to reduce its balance sheets.

“Chairman Jay Powell will be walking a tightrope, balancing the needs to raise rates and rein in a more systemic rise in inflation with the need to avert a meltdown in credit markets,” said Diane Swonk, chief economist at Grant Thornton.