BEIJING – Shares are stable in the afternoon trading on Wall Street on Friday at the end of the brutal week.
The S&P 500 fell 0.2% at 12:02 p.m. The Dow Jones Industrial Average fell 146 points, or 0.5 percent, to 29,774, and the Nasdaq rose 0.8 percent.
Each major index is on track for weekly losses after suffering several major declines this week as investors adjust to the bitter medicine of higher interest rates that the Federal Reserve and other central banks use in their fight against inflation. Higher rates are fighting inflation, but they are also slowing the economy and could lower stock and bond prices.
“Any lack of clarity or lack of confidence in the Federal Reserve will create high market volatility,” said Megan Horneman, chief investment officer at Verdence Capital Advisors.
The S&P 500 benchmark fell more than 6% for the week. Concerns about inflation, rising interest rates and the risk of a recession dragged him into a bear market earlier this week, meaning he has fallen more than 20% from his peak. It is now about 23% below its record set earlier this year, and back where it was at the end of 2020. This virtually erases 2021, which was one of the best years for Wall Street since the beginning of millennium.
The main concern for investors is whether the aggressive increase in interest rates by the Federal Reserve and other central banks around the world will mitigate record high inflation without pushing the United States and other economies into recession.
“There is a lot of uncertainty right now about the timing of the recession, but the risks are clearly increasing,” Horneman said.
On Wednesday, the Fed raised its key short-term interest rate by three-quarters of a percentage point, tripled from normal. She could consider another such large increase at her next meeting in July. At the same time, the central bank is allowing some of the trillions of dollars of bonds it bought during the pandemic to go off balance. This should put pressure on raising long-term interest rates. This is another way in which central banks are snatching the support they previously supported under the markets to boost the economy.
The Fed’s efforts to slow the US economy come at a time when some other economic growth measures, such as retail, are slowing. This raised fears that the Fed’s actions could be too aggressive.
Investors will have a chance to re-evaluate the Fed’s thinking next week when President Jerome Powell testifies before Congress. The testimony is scheduled for Wednesday and Thursday.
Technology companies have risen. Apple rose 1%. Healthcare companies, retailers and banks also benefit. Energy companies fell as crude oil prices in the United States fell 5.3 percent. Exxon Mobil fell 5.1%.
Bond yields declined. Yields on 10-year bonds fell to 3.22% from 3.30% late on Thursday.
Markets in the United States will be closed on Monday in honor of June 16.
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Shares remained stable on Wall Street at the end of the brutal week
Source link Shares remained stable on Wall Street at the end of the brutal week