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

Wall Street stocks got off to a bearish start and ended higher overall on Friday, although the rebound was not enough to erase their losses for the week.

The S&P 500 rose 1.1% after falling 0.9% at the start. The gain ended a four-day losing streak for the benchmark, which still posted its fourth losing week in the past five.

The Dow Jones Industrial Average rose 1%, while the tech-heavy Nasdaq gained 0.9% after tech stocks fell.

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

The S&P 500 has been in a bear market since last month, which means an extended decline of 20% or more from its most recent peak. It is now down 20.2% from its peak at the start of this year.

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

The deep market slump this year reflects investors’ concern about rising inflation and the possibility that higher interest rates could lead to a recession.

“What we’re seeing today really reflects what we’re going to see here in July, which is continued pressure in the markets, unless we see outsized economic reports on jobs or inflation, or a change more significant of 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 Small Business Index rose 19.77 points, or 1.2%, to 1,727.76.

The latest market swings precede a long holiday weekend. Financial markets in the United States will be closed on Monday for Independence Day.

Wall Street remains concerned about the risk of recession as economic growth slows and the Federal Reserve aggressively raises interest rates. The Fed raises rates Deliberately slowing economic growth to help calm inflation, but could potentially go too far and cause a recession.

Economic data for the past few weeks has shown that inflation remains high and the economy is slowing. The latter raised hopes on Wall Street that the Fed will eventually ease its aggressive pressure to raise rates, which has weighed on equities, especially more expensive sectors like technology. Analysts do not expect equities to rally until there are solid signs that inflation is easing.

Friday’s latest economic update for the manufacturing sector shows a continued slowdown in growth in June, sharper than economists expected. A report on Thursday showed a measure of inflation closely watched by the Fed rose 6.3% in May from a year earlier, unchanged from its level in April.

Earlier this week, a worrying report showed consumer confidence slipping to a 16-month low. The government also reported that the The US economy has contracted at an annual rate of 1.6% in the first quarter and weak consumer spending was a key driver of this contraction.

Kohls plunged 19.6% after the department store’s potential sale slumped amid a volatile retail environment as consumers lost confidence and cut spending. Kohl’s had entered into exclusive talks with Franchise Group, which owns Vitamin Shop and other outlets, for a deal potentially worth around $8 billion.

Other retailers, restaurant chains and businesses that rely on direct consumer spending have helped the market rally. Amazon rose 3.2%, Home Depot gained 1.8% and Starbucks rose 3.8%.

Banking and healthcare stocks also posted gains. Wells Fargo rose 1.9% and Johnson & Johnson closed up 1.1%.

Tech stocks largely rebounded from their broad morning slump, though many still closed lower. Chipmaker Micron fell 3% after giving investors a disappointing profit forecast amid concerns about falling demand. This weighed heavily on other chipmakers. Nvidia fell 4.2% and Qualcomm lost 3.3%.

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