Stocks rally, but still mark their 6th consecutive week of losses
Wall Street capped off another week of volatile trading with a broad rally on Friday, though it wasn’t enough to prevent the market from its sixth consecutive weekly decline, the longest such streak since 2011.
The S&P 500 climbed 2.4%. More than 90% of the companies in the benchmark index closed higher. The Nasdaq rose 3.8% as additional gains in tech companies helped lift the tech-heavy index. The Dow Jones Industrial Average rose 1.5%.
The bullish finish still left the indexes with weekly losses of more than 2.4% each, extending the streak of weekly declines to six weeks for the S&P 500 and Nasdaq, while the Dow Jones recorded its seventh decline. consecutive weekly.
Markets have been crashing since late March as traders fear the Federal Reserve will fail in its delicate mission to slow the economy enough to contain the highest inflation in four decades without triggering a recession.
Although there have been sudden rallies along the way, including a 2.5% gain for the S&P 500 in late April and a 3% gain in early May, the market has continued to lose ground since hit an all-time high at the start of the year.
It’s not an unusual trend on Wall Street when indices are about to enter a bear market, or a drop of 20% or more from their most recent high. The S&P 500 came closest to a bear market this year on Thursday, when it ended 18.1% below its January high.
“If you look back at how bear markets play out, they don’t go down every day, all day, all at once until the finish, they have really good rallies,” said manager Tom Martin. lead portfolio manager at Globalt Investments. “It could be one of those big rallies that brings you back a bit before the market goes back down.”
The S&P 500 rose 93.81 points to 4,023.89. The index is now down 15.6% for the year. The Dow gained 466.36 points to 32,196.66, while the Nasdaq rose 434.04 points to 11,805.
Smaller company stocks also staged a strong rally. The Russell 2000 gained 53.28 points, or 3.1%, to 1,792.67.
Twitter fell 9.7% after Tesla CEO Elon Musk said he was suspending his deal to acquire the social media company. Tesla rose 5.7%.
Businesses are struggling to meet growing demand for a wide range of products and commodities amid supply chain and production issues. They have raised the prices of everything from food to clothing, putting pressure on consumers and raising fears of falling spending and slowing economic growth.
The Fed is trying to blunt the impact of rising inflation by pulling its benchmark short-term interest rate from its near-zero record high, where it has spent most of the pandemic. He also said he may continue to raise rates to double the usual amount at future meetings. Investors fear that the central bank could cause a recession if it raises rates too high or too quickly.
The Department of Labor released reports this week confirming persistently high consumer and wholesale prices that are affecting businesses.
“There are a lot of problems and rising inflation with Fed tightening is not the best of market conditions, but at some point it gets priced in,” said Jay Hatfield, CEO of Infrastructure Capital Advisors.
Meanwhile, China’s decision to lock down major cities amid concerns over a resurgence of COVID-19 has further strained supply chains and Russia’s invasion of Ukraine has increased already high energy and food costs around the world.
Tech stocks led the gains on Friday. Apple rose 3.2% and Microsoft 2.3%. The sector has been the source of much of the broader market volatility throughout the week and has fallen overall as investors brace for higher interest rates, which tend to rise. weigh more heavily on the most expensive stocks.
Retailers and communications companies also made solid gains. Amazon jumped 5.7% and parent company Google rose 2.8%.
Bond yields rose significantly. The 10-year Treasury yield rose to 2.93% from 2.82% on Thursday evening.
The price of US crude oil rose 4.1% to settle at $110.49 a barrel. That’s up about 50% for the year.
Investors also focused on the latest round of corporate earnings to better understand the impact of inflation on businesses and consumers. Several major retailers will release results next week, including Walmart, Target and Home Depot.
Bitcoin stabilized around $30,000 late Friday after falling to around $25,420 earlier this week, its lowest level since December 2020, according to CoinDesk. Just six months ago it was over $66,000.
Veiga reported from Los Angeles.