US STOCKS-Wall St bounces after sell-off as volatility reigns

U.S. stocks rose on Friday, a day after a sharp sell-off as investors grappled with a likely recession on the heels of rate hikes by multiple global central banks seeking to tame rising inflation. Rampant and stubbornly high inflation has unnerved investors this year as the U.S. Federal Reserve and most major central banks have begun to pivot from easy monetary policies to tightening measures which will slow the economy and potentially dent corporate earnings.


Reuters | Washington DC | Updated: 18-06-2022 00:49 IST | Created: 18-06-2022 00:34 IST
US STOCKS-Wall St bounces after sell-off as volatility reigns
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U.S. stocks rose on Friday, a day after a sharp sell-off as investors grappled with a likely recession on the heels of rate hikes by multiple global central banks seeking to tame rising inflation.

Rampant and stubbornly high inflation has unnerved investors this year as the U.S. Federal Reserve and most major central banks have begun to pivot from easy monetary policies to tightening measures which will slow the economy and potentially dent corporate earnings. Each of the three major indexes on Wall Street were on pace for a third consecutive weekly decline, for their third straight weekly losses. The benchmark S&P 500 index is poised for its biggest weekly percentage drop since January.

"This volatility is likely to continue. You always get these days kind of in the middle where there is a bounce on sentiment or we're a little bit oversold or whatever it might be," said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky. "But I don't think we are out of the weeds of this thing, particularly with the Fed kind of changing tune," he added. "The market will be on edge until we get more clarity of the next couple of meetings so it could be a long summer of this type of activity."

The Dow Jones Industrial Average rose 187.42 points, or 0.63%, to 30,114.49, the S&P 500 gained 34.12 points, or 0.93%, at 3,700.89 and the Nasdaq Composite added 221.89 points, or 2.08%, at 10,867.99. The benchmark S&P index has slumped about 23% year-to-date and recently confirmed a bear market began on Jan. 3. The Dow Industrials was on the cusp of confirming its own bear market.

Stocks rallied on Wednesday after the Fed raised its key rate by 75 basis points, the biggest hike in nearly three decades, while the Bank of England and the Swiss National Bank also raised borrowing costs. On Friday, Fed Chair Jerome Powell once again stressed the central bank's focus on bringing back inflation to its 2% target while speaking at a conference.

Economic data on Friday showed production at U.S. factories fell unexpectedly in the latest indication economic activity was on the wane. Gains were led by the communication services and consumer discretionary sectors, which have been the two worst performing of the 11 major groups on the year.

In contrast, energy, the year's best performing sector, fell sharply and was on pace for its biggest weekly percentage drop since March 2020, at the height of the COVID-19 pandemic plunge, on concerns a slowing global economy could sap demand for crude oil. Also contributing to choppy trading was the expiration of monthly and quarterly options contracts ahead of the Juneteenth market holiday on Monday.

Advancing issues outnumbered decliners on the NYSE by a 1.70-to-1 ratio. On Nasdaq, a 2.62-to-1 ratio favored advancers. The S&P 500 posted one new 52-week high and 55 new lows; the Nasdaq Composite recorded four new highs and 216 new lows.

 

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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