Wall Street opens cautiously higher at the end of a brutal week
NEW YORK (AP) — Stocks opened cautiously higher on Wall Street on Friday at the end of a brutal week. Stocks have suffered several massive declines this week as markets get used to the bitter medicine of higher interest rates that the Federal Reserve and other central banks are using in their fight against inflation. Higher rates fight inflation, but they also slow the economy and can lower stock and bond prices. The S&P 500 rose 0.8% at the start, but is still down more than 5% for the week. The Dow Jones rose 0.6% while gains from technology companies pushed the Nasdaq up 1.4%.
THIS IS A BREAKING NEWS UPDATE. AP’s previous story follows below.
BEIJING (AP) — Global stocks and Wall Street futures rebounded on Friday after falling the day before on concerns that economic activity could be depressed by interest rate hikes to calm inflation.
London, Frankfurt, Shanghai and Hong Kong advanced. Tokyo backed off. Oil prices rose to stay near $120 a barrel.
Wall Street’s S&P 500 index lost 3.3% on Thursday and other major benchmarks also fell after Britain’s central bank followed the Federal Reserve in raising its benchmark rate. The central banks of Switzerland and Taiwan also raised their rates.
Investors fear that measures to control inflation, which is at four-decade highs, could tip the United States and other major economies into recession.
“Pain is inflicted almost everywhere, and sharing does nothing to improve it,” Mizuho Bank’s Tan Boon Heng said in a report.
In early trading, the FTSE 100 in London gained 0.6% to 7,088.40 and the Frankfurt DAX advanced 0.7% to 13,133.05. The CAC 40 in Paris was up 0.6% at 5,918.85.
On Wall Street, the S&P 500 future rose 0.9% and that of the Dow Jones Industrial Average rose 0.8%.
On Thursday, the Dow lost 2.4% and the Nasdaq fell 4.1%.
The S&P 500 is 23.6% below its January 3 high. That erases gains from 2021, one of Wall Street’s best years this century.
In Asia, the Shanghai Composite Index gained 1% to 3,316.79 after spending part of the day in negative territory. The Hang Seng in Hong Kong advanced 1.1% to 21,075.00.
The Nikkei 225 in Tokyo fell 1.8% to 25,963.00 after Japan’s central bank ended a two-day meeting with no change to its benchmark rate of minus 0.1%. The Bank of Japan avoided joining in the rate hike, which caused the yen to slide back to its lowest level in two decades against the dollar.
Seoul’s Kospi fell 0.4% to 2,440.93 and Sydney’s S&P-ASX 200 fell 1.8% to 6,474.80.
India’s Sensex fell 0.3% to 51,350.24. Markets in New Zealand and Southeast Asia declined.
Along with the rate hike, some of the trillions of dollars in bonds bought by the Fed to pump money into the US financial system during the pandemic are being allowed off its balance sheet. This should put upward pressure on market interest rates.
Fewer American workers applied for unemployment benefits last week than a week earlier. But other signs of trouble have emerged.
President Joe Biden told The Associated Press on Thursday that he sees reason for optimism.
A recession is “not inevitable,” Biden said.
In energy markets, the benchmark US oil rose 76 cents to $118.36 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.27 on Thursday to $117.58. Brent crude, the price basis for international trade, was 56 cents higher at $120.37 a barrel in London. It gained $1.30 the previous session at $119.81.
The dollar gained 134.43 yen from 132.00 yen on Thursday. The euro fell to $1.0517 from $1.0573.