U.S. stocks closed higher after Friday’s rally helped par some losses earlier this week as concerns about lingering inflation and the resilience of the U.S. economy led greater volatility in recent sessions.
The S&P 500 rose 2.4%, while the Nasdaq rose more than 3.8% in its best day since mid-March. The Dow added nearly 450 points. The sharpest move higher came after Federal Reserve Chairman Jerome Powell he reiterated Thursday in an interview with Marketplace public radio that two more 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 echoed what other Fed officials also said this week.
Just a day earlier, the S&P 500 had closed within striking distance of a bear market, typically defined as a close of at least 20% from a recent all-time high. The index has declined about 17% since its record high on Jan. 3 through Friday’s close and ended its sixth straight week down.
Treasury yields rose and then pared gains this week, with the benchmark 10-year Treasury yield hovering around 2.9% Friday morning. Bitcoin prices recovered to trade above $30,000 after setting the lowest level since December 2020, as a crater in Luna prices reverberated further into the broader cryptocurrency market.
This week’s market moves coincided with two big inflation reports that came in hotter than expected. Thursday’s producer price index showed an 11% year-on-year increase in wholesale prices last month, with the rate moderating only slightly from an all-time high of 11.5% of March And the consumer price index released earlier this week showed a still-high 8.3% annual increase in prices paid by consumers last month.
“Inflation has certainly become a real problem, not only at present, but for the market as a whole, as the Fed has also raised its outlook on the number of [interest rate] hikes are needed,” Pimco managing director and portfolio manager Sonali Pier told Yahoo Finance Live on Thursday. “In terms of the effect of inflation, it’s really at this point, we’ll see if the Fed raises rates, relaxes . part of the balance sheet, it can remove some of that inflation foam. Because it’s pretty high and it’s starting to affect companies, from their ability to drive from a price energy perspective, as well as consumers, either at the gas pump or as a result of increases in ‘food and the like’.
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Other strategists agreed that the Fed’s response to inflation, and the health of the economy as the Fed tightens financial conditions to deal with inflation, will be the key factor for markets to watch.
“Right now we’re in an environment where inflation is high. The labor market is very tight. The Fed wants to reduce inflation. They want to cool the overheating labor market, which means their bias is to tighten the finances. and trying to slow growth,” UBS head of asset allocation Jason Draho said on Thursday. “In this environment, it’s not great for any type of financial asset.”
“[Once] we get a real kind of break in inflation that people become much more comfortable than moderating and moderating [to] a sustainable level that the Fed could be more comfortable with, and they don’t have to hike more aggressively … I think that’s the key catalyst,” Draho said. “Unfortunately, that could take a few more months before the data starts in fact they clearly show that inflation is definitely below its peak and that the Fed could reach its target two years early.”
“So I think it’s definitely a choppy market at the moment,” he added.
4:00 PM ET: S&P 500, Dow and Nasdaq close higher after recovery
Here’s where the stock was trading at the end of Friday’s session:
S&P 500 (^GSPC): +93.78 (+2.39%) up to 4,023.86
Dow (^DJI): +465.64 (+1.47%) up to 32,195.94
Nasdaq (^IXIC): +434.04 (+3.82%) to 11,805.00
Crude (CL=F): +$4.13 (+3.89%) to $110.26 a barrel
Gold (GC=F): -$17.90 (-0.98%) to $1,806.70 per ounce
10-year treasury (^TNX): +11.8 bp for a return of 2.9350%
12:02 pm ET: Stocks extend gains, Nasdaq headed for best day since mid-March
Here were the top market moves as of 12:02pm ET:
S&P 500 (^GSPC): +94.97 (+2.42%) to 4,025.05
Dow (^DJI): +469.85 (+1.48%) to 32,200.15
Nasdaq (^IXIC): +428.59 (+3.77%) up to 11,799.55
Crude (CL=F): +$3.97 (+3.74%) to $110.10 a barrel
Gold (GC=F): -$16.80 (-0.92%) to $1,807.80 per ounce
10-year treasury (^TNX): +8 bp for a return of 2.8970%
11:00 am ET: Amazon faces longest losing streak in 14 years amid tech sell-off
Last week’s slide in tech stocks has taken shares of mega-cap tech names from Apple ( AAPL ) to Amazon ( AMZN ) well above their all-time highs.
Amazon headed for its longest losing streak since 2008 as shares of the e-commerce giant headed for a seventh straight weekly loss. As of Thursday’s closing prices, the stock was on course for a weekly loss of 6.8%, though it was poised to pare some of those losses amid Friday’s rally.
Apple, similarly, has been dethroned as the world’s most valuable company, with Saudi Aramco’s market capitalization overtaking that of the iPhone maker this week. Apple shares have fallen 19.7% for the year through Thursday’s close, compared with the S&P 500’s 17.5% decline during that period.
10:15am ET: Consumer sentiment falls to lowest level since 2011: University of Michigan
Consumer sentiment fell to a more than decade low in early May, according to the University of Michigan, as concerns about inflation persisted.
The University of Michigan consumer surveys, closely watched The index fell to 59.1 in May’s preliminary report, a sharp drop from April’s reading of 65.2. The latest reading marked the lowest since 2011.
The decline in sentiment “was broad-based, both for current economic conditions and consumer expectations, and visible across income, age, education, geography and political affiliation, continuing the overall downward trend in sentiment during the last year,” said Joanne Hsu, principal. of Consumer Surveys, said in a press release. “Consumers’ assessment of their current financial situation compared to a year ago 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 suggested that the fall in risk assets in recent weeks played an even bigger role in the main index’s decline.
“I’d say the decline was largely a function of falling stock prices. We know U.M. is more sensitive to the markets,” Neil Dutta, chief economist at Renaissance Macro Research, wrote in a email Friday morning. “Inflation is a problem for sure, but the set of inflation expectations has not changed.”
9:33 am ET: Stocks open higher
Here were the top moves in the markets as of 9:33 a.m. ET:
S&P 500 (^GSPC): +43.33 (+1.10%) to 3,973.41
Dow (^DJI): +241.55 (+0.76%) to 31,971.85
Nasdaq (^IXIC): +189.64 (+1.67%) up to 11,560.61
Crude (CL=F): +$3.05 (+2.87%) to $109.18 a barrel
Gold (GC=F): -$24.60 (-1.35%) to $1,800.00 per ounce
10-year treasury (^TNX): +9.8 bp for a return of 2.9150%
7:54 am ET: Tesla shares jump in early trade after Musk says Twitter deal is on hold
Shares of Tesla ( TSLA ) rose more than 6% before the opening bell Friday morning after CEO Elon Musk said his $44 billion plan to buy Twitter ( TWTR ) is on hold temporarily, pending more details on how much of Twitter’s user base is bot. accounts
“Twitter is temporarily paused pending details that support the calculation that spam or fake accounts effectively represent less than 5% of users,” Musk said. he said in a post on Twitter early Friday. It linked to a Reuters story suggesting that Twitter’s filings showed that fake or spam accounts accounted for less than 5% of the company’s monetizable daily active users.
In announcing his deal to buy Twitter last month, Musk suggested that targeting bot accounts and authenticating users was one of his priorities for the company after the deal.
Twitter shares sank 11% in early trade to around $40 each.
7:45am ET Friday: Stock futures jump after Powell reaffirms 75 basis point rate hikes not currently under discussion
Here’s where the markets traded before the opening bell on Friday morning:
S&P 500 futures (IS=F): +46 points (+1.17%) up to 3,973.25
Dow futures (YM=F): +262.00 points (+0.83%) up to 31,914.00
Nasdaq futures (NQ=F): +206.75 points (+1.73%) up to 12,154.00
Crude (CL=F): +$1.79 (+1.69%) to $107.92 a barrel
Gold (GC=F): -$7.90 (-0.43%) to $1,816.70 per ounce
10-year treasury (^TNX): +9.8 bp for a return of 2.915%
6:10 PM ET Thursday: Stocks open lower
Here’s where the markets were trading Thursday evening:
S&P 500 futures (IS=F): -10 points (-0.25%) to 3,917.25
Dow futures (YM=F): -73 points (-0.23%) up to 31,579.00
Nasdaq futures (NQ=F): -41 points (-0.34%) to 11,906.25
NEW YORK, NEW YORK – MAY 12: Traders work on the floor of the New York Stock Exchange (NYSE) on May 12, 2022 in New York City. The Dow Jones Industrial Average fell in the morning as investors continue to worry about inflation and other global issues. (Photo by Spencer Platt/Getty Images)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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