US stocks rose on Friday, with the S&P 500 snapping a three-week losing streak as investors digested the latest assertions by Federal Reserve officials that they remained committed to reducing inflation.
The S&P 500 rose more than 3%, posting a straight day of gains and its first weekly advance since late May. The S&P 500’s weekly advance of more than 6% also marked the second-best 2022 so far. The Dow rose more than 800 points, or 2.7%, while the Nasdaq rose more than 3.3% as technology stocks rallied. The major averages held on to gains even after a closely observed impression on consumer sentiment was revised down to a new record low as Americans continued to struggle with high inflation. However, the survey also showed that consumers’ one-year inflation expectations eased from a multi-decade high.
All three major indexes traded choppily this week but ultimately trended higher as investors considered the continued economic impact of the Fed’s moves to curb rising prices. Fed Chairman Jerome Powell made his most explicit acknowledgment yet this week that a recession was “certainly a possibility,” though not the “anticipated outcome,” as the central bank further raised rates interest rate this year.
“Investors really want the chair to understand that inflation is a big issue and that dealing with it earlier is better in the long run,” Diane Jaffee, group managing director and senior portfolio manager at TCW Group, told Yahoo! Finance Live. Thursday. “So I think investors are taking stock that the Fed is going to do whatever it takes.”
Still, Powell’s nod to current recession risks was followed by increased warning signs from a number of Wall Street firms that have recently raised their own forecasts about the likelihood of a recession in short term. Powell’s assertion that the Fed’s commitment to reducing inflation was “unconditional” also suggested the central bank would not stop raising rates at the first signs of an economic slowdown.
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Cyclical stocks seen as most vulnerable during downturns fell this week, with the energy sector posting weekly losses and the materials sector lagging the S&P 500. West Texas Intermediate crude futures were around $107 per barrel and posted its third straight weekly loss, and is headed for its first monthly loss since November.
Treasury yields rose across the curve to level after renewed recession concerns also pushed yields lower earlier this week. The benchmark 10-year yield climbed back above 3.10%, after topping 3.31% earlier in the week.
NEW YORK, NEW YORK – JUNE 14: Traders work on the floor of the New York Stock Exchange (NYSE) on June 14, 2022 in New York City. The Dow rose in morning trading after a drop of more than 800 points on Monday, sending the market into bearish territory on fears of a possible recession. (Photo by Spencer Platt/Getty Images)
FedEx (FDX) shares rose after the shipping giant delivered a forecast for the whole year that beat Wall Street estimates, while meeting expectations for fourth-quarter fiscal profit. FedEx sees full-year adjusted earnings per share in the range of $22.50 to $24.50, compared with the $22.36 seen by analysts, according to Bloomberg. FedEx Chief Customer Officer Brie Carere noted on the company’s earnings call Thursday that they forecast business-to-consumer shipping volumes will come under some pressure next year as spending of consumers continues to “lean towards goods services”.
Zendesk (ZEN) Shares jumped on Friday after the company announced it had reached an agreement to be taken private by a group of investors including Hellman & Friedman and Permira. The cash transaction will value the software company at about $10.2 billion and will give Zendesk shareholders $77.50 per share. That represents a premium of about 34% compared to Zendesk’s closing level on Thursday.
CarMax (KMX) actions advanced after the The used vehicle retailer posted first-quarter results that exceeded expectations. Earnings of $1.56 a share on revenue of $9.31 billion beat estimates of earnings of $1.51 a share on revenue of $8.99 billion, according to Bloomberg data. However, total retail used vehicle unit sales were down 11% compared to last year, which CarMax said was a result of “an overrun of stimulus benefits paid in the prior-year period; widespread inflationary pressures, including vehicle affordability challenges; and declining consumer confidence.”
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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