US stocks rose on Friday after a heavy week of losses in major indexes.
Traders welcomed the postponement of the brutal spring sale, which left virtually no corner of the market unscathed. This week brought some shocks to the market. The data show that inflation is still hot, which disappoints investors. Cryptocurrencies collapsed after an unexpected collapse of the so-called stable coin. The S&P 500 index on Thursday flirts with bear market territory, a level 20% lower than the recent peak, and the Dow Jones Industrial Average is at a pace to report weekly losses for the seventh consecutive week, its longest series of losses for more than 20 years.
The Nasdaq Composite jumped 2.6 percent in recent trading, while the S&P 500 rose 1.3 percent and the Dow Industrials rose 132 points, or 0.4 percent.
The upward movement followed a rally in Thursday’s late session, which helped the Nasdaq Composite win. Risk sentiment transferred to international stock markets overnight. Until Friday morning in the United States, investors grabbed shares of broken technology companies before the bell began.
However, traders and investors did not want to announce a bottom.
“Will this week be the lowest of the year?” I doubt it, “said Andrew Slimon, senior portfolio manager at Morgan Stanley Investment Management. “I will not be surprised if we get a deeper fear of growth this summer.”
Investors are currently facing problems unseen for decades as inflation continues to move close to a four-decade high. Many traders believe the recession is more likely as the Federal Reserve tries to contain price pressures. Many institutional and individual investors have begun to reject the idea that the Fed could create the so-called soft landing, during which inflation falls, but unemployment remains low and the economy continues to grow.
Although Mr Sliman said he believed there was more short-term pain for the stock, he remained optimistic in the long term and said he believed the market would recover by the end of the year, citing some rather optimistic earnings reports. More than three-quarters of the S&P 500 companies reported a positive surprise on earnings per share for the first quarter, according to previous quarters, according to FactSet.
“I spend a lot of time talking to companies and listening to company conference calls, and what I can tell you is that I don’t collectively hear the weaknesses of the companies I see in the stock market,” Mr Sliman said.
On Thursday, Fed Chairman Jerome Powell acknowledged that controlling inflation could have a short-term impact on the economy, saying in the Marketplace radio program that “the process of reducing inflation to 2% will also involve some pain.”
He reiterated that further increases of half a percent are likely to be appropriate for the upcoming meetings, but said the central bank could consider larger increases if economic data calls for such steps.
This week’s inflation report offered some consolation to investors, especially as the data showed that price pressures are largely broad. Even as gasoline prices fell, food prices rose, as did food, air travel and other services, scaring away investors who hoped inflation had peaked.
The last time inflation was so high, the Federal Reserve raised interest rates so much that it put the United States in recession. Will we see a replay today? WSJ’s Dion Rabuin explains why the Fed’s next steps are crucial. Photo: Kevin Dietsch / Getty Images
This has forced many to sell riskier investments and accumulate in assets considered safer. Growth and technology stocks, which are usually affected by higher interest rates, have been destroyed in particular. But risk-taking sentiment has erupted elsewhere, leading to a sharp decline in cryptocurrencies.
“This week has been a turning point in the markets. The mood has changed from the assessment of whether we can live in an economy with higher rates to [investors] asking, “Are we on the verge of recession?” said Florian Ielpo, macro manager at Lombard Odier Investment Managers.
On Friday, however, technology stocks were among those leading to the recovery. Nvidia added 9.3%, PayPal advanced 5.4% and Netflix won 4.5%.
Twitter TWTR -9.73% shares fell 8.5% after Tesla CEO Elon Musk tweeted that his deal to buy the social media company and turn it private was “temporarily withheld” pending details. for the amount of fake accounts on the social media platform. Mr Musk later tweeted that he was committed to the acquisition, helping Twitter reduce pre-market losses by more than 20%. Shares of Tesla recently rose 7%.
Robinhood rose 24 percent after Sam Bankman-Fried, founder of the FTX cryptocurrency exchange, revealed he had bought a 7.6 percent stake in the brokerage firm. Duolingo jumped 39% after the language learning platform reported a sharp jump in revenue and monthly active users.
Bitcoin rose to about $ 30,419 on Friday from its 17:00 ET level of $ 28,572.24 on Thursday. Yet elsewhere in the cryptocurrency markets, the besieged TerraUSD stablecoin continued to decline in a spiral, trading at 11 cents. TerraUSD broke its typical fixation to $ 1 last weekend after a wave of token sales. His sister token Luna also fell sharply this week, trading at half a penny, from more than $ 60 on Monday.
In the bond market, the yield on US 10-year benchmark government securities rose to 2.919% from 2.815% on Thursday, reversing the four-day decline in yields that came when investors returned to bonds. Yields rise when bond prices fall.
Overseas stock markets also traded higher on Friday. In Europe, the pan-continental Stoxx Europe 600 rose 1.6%. In Asia, Hong Kong’s Hang Seng added 2.7 percent, while Japan’s Nikkei 225 jumped 2.6 percent. Shanghai Composite rose 1%.
Traders worked on the floor of the New York Stock Exchange on Thursday.
Photo: John Minchilo / Associated Press
-Catlin Ostroff contributed to this article.
Email Caitlin McCabe at caitlin.mccabe@wsj.com and Corrie Driebusch at corrie.driebusch@dowjones.com
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