Wall Street closes higher but still ends the week in the red

Shares shook off a morning decline and closed higher Friday, but not enough to erase their losses for the week. It was the fourth losing week in the last five for Wall Street. The latest choppy trading comes as investors worry about high inflation and the possibility that higher interest rates could trigger a recession. / SETH WENIG / ASSOCIATED PRESS

Shares on Wall Street shook off a bleak start and ended largely higher on Friday, though the recovery wasn’t enough to erase their losses for the week.

The S&P 500 rose 1.1% after falling 0.9% to begin with. The gain broke a four-day losing streak for the benchmark index, which continued to record its fourth losing week in the last five.

The Dow Jones Industrial Average rose 1%, while the tech-heavy Nasdaq gained 0.9% after a sell-off in tech stocks eased.

The latest choppy trading comes a day after the S&P 500 closed its worst quarter since the start of the pandemic in early 2020. Its performance in the first half of 2022 was the worst since the first six months of 1970.

The S&P 500 has been in a bear market since last month, signifying a sustained decline of 20% or more from its most recent peak. It is now 20.2% lower than the peak it had reached early this year.

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Bond yields fell significantly. The 10-year Treasury yield, which helps determine mortgage rates, fell to 2.89% from 2.97% last Thursday. The return on the 2-year Treasury fell from 2.92% to 2.83%.

The deep market slump this year reflects investor concerns about rising inflation and the possibility that higher interest rates could trigger a recession.

“What we’re seeing today really reflects what we’re going to see here in July, which is continued pressure on the markets, unless we see excessive economic reports on jobs or inflation, or a more meaningful change in Fed policy. said Greg Bassuk, CEO of AXS Investments.

The S&P 500 rose 39.95 to 3,825.33. About 85% of the stocks in the index finished higher.

The Dow gained 321.83 points to 31,097.26, while the Nasdaq rose 99.11 points to 11,127.85. The Russell 2000 Smaller Company Index rose 19.77 points or 1.2% to 1,727.76.

The last revolutions of the market precede a long holiday weekend. US financial markets are closed on Monday for Independence Day.

Wall Street remains concerned about the risk of a recession as economic growth slows and the Federal Reserve aggressively raises interest rates. The Fed is raising interest rates to deliberately slow economic growth to cool inflation, but could potentially go too far and trigger a recession.

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Economic data from recent weeks has shown that inflation remains high and the economy is slowing. The latter has sparked hopes on Wall Street that the Fed will eventually ease its aggressive pressure to raise interest rates that weighed on equities, especially higher-end sectors like technology. Analysts don’t expect much from a rally for stocks until there are solid signs of inflation cooling.

Friday’s latest manufacturing economic update shows an ongoing slowdown in growth in June that was sharper than economists had expected. A report on Thursday showed that an inflation measure closely monitored by the Fed rose 6.3% in May from a year earlier, unchanged from its April level.

Earlier this week, a worrying report showed consumer confidence has plunged to its lowest level in 16 months. The government also reported that the US economy shrank by 1.6% year-on-year in the first quarter and that weak consumer spending was a major part of that contraction.

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Kohl’s plunged 19.6% after the department store’s potential sales fell apart amid the shaky retail environment as consumers lose confidence and cut spending. Kohl’s had entered into exclusive talks with Franchise Group, the owner of Vitamin Shop and other stores, for a deal potentially worth about $8 billion.

Other retailers, restaurant chains and companies that rely on direct consumer spending helped lead the market rally. Amazon was up 3.2%, Home Depot was up 1.8% and Starbucks was up 3.8%.

Banks and health stocks also made gains. Wells Fargo rose 1.9% and Johnson & Johnson closed 1.1% higher.

Technology stocks largely recovered from their broad morning slump, although many still closed lower. Chipmaker Micron lost 3% after giving investors a disappointing earnings forecast amid concerns about falling demand. That weighed heavily on other chip makers. Nvidia fell 4.2% and Qualcomm lost 3.3%.

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