US stocks rose on Friday, erasing some of the losses incurred earlier this week after concerns about persistent inflation and the resilience of the US economy increased volatility in recent sessions.
The S&P 500 is up more than 1.5% on the day Friday while the Nasdaq is up nearly 3%. Dow added more than 350 points. The sharp upward movement came after Federal Reserve Chairman Jerome Powell He confirmed in an interview with Public Market Radio on Thursday That two more rate hikes of 50 basis points were on the table for the next two Fed meetings, and that officials were not “actively considering” a more aggressive 75 basis point hike. his comments He echoed what Fed officials also said this week.
Just a day ago, the S&P500 closed within walking distance of a bear market, which is usually defined as a close of at least 20% from a recent record high. The index is down just over 18% from its Jan. 3 high through Thursday’s close, and is headed for a weekly decline of 4.7% if levels hold through the end of Friday’s session.
The Dow Jones Industrial Average and Nasdaq Composite also headed for weekly losses of 3.6% and 6.4%, respectively, based on Thursday’s closing prices. Treasury yields rose and then pared gains again this week, with the 10-year Treasury yield hovering around 2.9% on Friday morning. Bitcoin prices It recovered to trade above 30 thousand dollars after hitting its lowest level since December 2020, due to a collapse in prices color It resonated even more across the broader cryptocurrency market.
This week’s market volatility coincided with two major inflation reports that came in higher than expected. Producer Price Index for Thursday It showed an 11% year-over-year rise in wholesale prices last month, with only a slight moderation in that rate from March’s high of 11.5%. and the The Consumer Price Index was released earlier this week It showed a still-high 8.3% annual increase in the prices consumers paid last month.
“Inflation has certainly become not only an objective but also a real issue for the broader market, as the Federal Reserve has also increased its forecast for a number of [interest rate] A must visit,” Sonali Pier, Managing Director and Portfolio Manager at Pimco, Yahoo Finance Live on Thursday. “In terms of the impact of inflation, it’s really at this point, we’ll see if the Fed raises interest rates, undoes some of the balance sheet, it can remove some of the inflation churn. Because it’s so high, it’s starting to affect companies – from their ability Going forward from the perspective of pricing power, as well as consumers, whether it’s at the gas pump or as a result of increased food and the like.”
Other strategists agreed that the Fed’s response to inflation – and how well the economy holds up as the Fed tightens financial conditions to tackle inflation – will be the key factor to watch going forward in the markets.
“We are in an environment right now where inflation is high. The labor market is very tight. The Fed wants to bring down inflation. They want to sort of cool the overheating in the labor market, which means their bias is to tighten financial conditions and try to slow growth,” Jason Draho, head of allocation assets in UBS, He said on Thursday. “In this environment, it wouldn’t be great for any type of financial asset.”
“[Once] We got a kind of real cessation of inflation so that people become more comfortable than it is moderate and moderate [to] A sustainable level the Fed could be more comfortable, and they don’t have to raise it more aggressively… I think that’s the main catalyst,” Draho said. Unfortunately, it may be a few months before the data begins to clearly show that inflation is definitely below its peak, and the Fed can meet its target in two years.”
“So I think at the moment, it’s definitely a volatile market,” he added.
10:15 a.m. ET: Consumer confidence drops to lowest level since 2011: University of Michigan
Consumer confidence fell to its lowest level in more than a decade in early May, according to the University of Michigan, as inflation concerns persisted.
The Consumer surveys closely monitored by the University of Michigan The index fell to 59.1 in May’s preliminary report, sharply down from April’s reading of 65.2. The latest reading hit its lowest level since 2011.
The drop in sentiment was “widespread — relative to current economic conditions as well as consumer expectations, and was evident across income, age, education, geography and political affiliation — a continuation of the overall downward trend in sentiment over the past year,” Joanne Hsu, director of Consumer Surveys, said in a press release. Consumers’ assessment of their current financial situation compared to last year is at its lowest reading since 2013, with 36% of consumers attributing their negative assessment to inflation.
Consumer inflation expectations remained elevated in May, with the survey showing one-year inflation expectations unchanged at 5.4%. However, some strategists have suggested that the decline in risky assets over the past several weeks played a larger role in the decline in the main index.
“I would argue that the drop was largely a result of lower stock prices. We know U Mitch is more sensitive to markets,” Neil Dutta, head of economics at Renaissance Macro Research, wrote in an email Friday morning. “Inflation is a certain issue but the chain of inflation expectations has not changed.”
9:33 a.m. ET: Stocks opened higher
Here are the major moves in the markets as of 9:33 AM ET:
Standard & Poor’s 500 (^ Salafist Group for Preaching and Combat): +43.33 (+10%) to 3,973.41
dow (^ DJI): +241.55 (+0.76%) to 31971.85
Nasdaq (^ ninth): +189.64 (+1.67%) to 11560.61
raw (CL = F.): + 3.05 dollars (+ 2.87%) to 109.18 dollars per barrel
He went (GC = F.): – $24.60 (-1.35%) to $1,800.00 per ounce
Treasury for 10 years (^ degeneration): +9.8 basis points to produce 2.9150%
7:54 a.m. ET: Tesla shares jump in early trading after Musk says Twitter deal is paused
Tesla sharesTSLA(jumped more than 6% before the opening bell Friday morning after CEO Elon Musk said his $44 billion plan to buy Twitter)TWTR) temporarily, pending more details on how much Twitter’s usage base includes bot accounts.
“Twitter deal is temporarily on hold pending account backing up details that spam/fake accounts already account for less than 5% of users,” Musk He said in a Twitter post early Friday. He linked to a Reuters story indicating that filings on Twitter showed that fake or spam accounts make up less than 5% of the company’s monetized daily active users.
When announcing his deal to buy Twitter over the past month, Musk suggested targeting bot accounts and authenticating users was one of his priorities for the post-deal company.
Twitter shares sank 11% in early trading to hover around $40 per share.
7:45AM ET Friday: A jump in stock futures after Powell reconfirmed a 75 basis point interest rate hike not currently under discussion
Here is where the markets were trading before the opening bell on Friday morning:
S&P 500 futures contracts (ES = F.): +46 points (+17%) to 3,973.25
Dow futures contractsYM = F.): +262.00 points (+0.83%) to 31914.00
Nasdaq futures contractsNQ = F.): +206.75 points (+1.73%) to 12154.00
raw (CL = F.): +1.79 dollars (+1.69%) to 107.92 dollars per barrel
He went (GC = F.): – $7.90 (-0.43%) to $1,816.70 per ounce
Treasury for 10 years (^ degeneration): +9.8 basis points to produce 2.915%
6:10pm ET Thursday: Stocks open lower
Here’s where the markets are trading Thursday night:
S&P 500 futures contracts (ES = F.): -10 points (-0.25%) to 3,917.25
Dow futures contractsYM = F.): -73 points (-0.23%) to 31,579.00
Nasdaq futures contractsNQ = F.): -41 points (-0.34%) to 11906.25
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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