Stocks end higher on Wall Street, posting weekly gains
Stocks closed higher on Wall Street on Friday, posting strong weekly gains for major indexes. The benchmark S&P 500 index rose 2.4% on Friday, while the Dow Jones Industrial Average and the Nasdaq also gained ground. Social media companies were largely down after Snapchat’s parent company issued a weak outlook and The Washington Post reported that Elon Musk planned to cut around three-quarters of Twitter’s payroll after buying the company. The yield on the two-year Treasury note fell to 4.49% on hopes that the Federal Reserve may consider slowing future rate hikes after making another sharp hike next month.
THIS IS A BREAKING NEWS UPDATE. AP’s previous story follows below.
Stocks are broadly higher in afternoon trading on Wall Street on Friday, keeping major indexes on track for weekly gains after several days of up and down trading.
The S&P 500 was up 2.3% at 3:22 p.m. EST. The Dow Jones Industrial Average rose 742 points, or 2.4%, to 31,074 and the Nasdaq rose 2.2%.
More than 90% of stocks in the benchmark S&P 500 were up. Tech and healthcare companies are posting some of the biggest gains. Oracle rose 4.7% and Pfizer 5%.
Social media companies were largely down after Snapchat’s parent company released a weak forecast and The Washington Post reported that Elon Musk planned to cut about three-quarters of Twitter’s payroll after buying the company. Snap fell 29.6% and Twitter lost 4.6%.
The yield on the 10-year Treasury note, which affects mortgage rates, slipped to 4.22% from 4.24% on Thursday evening. The two-year Treasury yield, which tends to track investor expectations for Federal Reserve action on interest rates, fell to 4.51% from 4.61%.
The markets have been destabilized in recent days. The shares went from strong gains at the start of the week to losses later in the week. The benchmark S&P 500 and other major indexes are still on track for weekly gains in an encouraging month of October so far.
Investors have focused, for now, on the latest round of corporate earnings as they seek more clues about how inflation and rising interest rates are shaping the economy. Reports from airlines, banks, rail operators and others have so far provided mixed financial results and forecasts.
American Express fell 2.9% after setting aside hundreds of millions of dollars to cover potential losses as the economy continues to deteriorate. Railroad CSX rose 1.6% after posting strong financial results.
Investors remain concerned about inflation and the Federal Reserve’s attempt to cool hot prices for everything from food to clothing by aggressively raising interest rates. Higher interest rates tend to discourage borrowing and investing, slowing economic activity. This could tip economies into recession.
“The concern is always that bond yields are rising and the Fed is not signaling a pivot,” said Ross Mayfield, investment strategist at Baird. “Until there’s a significant pivot driven by lower inflation, it’s a huge wind market.”
The latest inflation data from Japan is yet another reminder that stubbornly high prices remain a global problem. Japan’s core consumer prices rose 3.0% in September from a year earlier, government data showed on Friday. This is the largest increase in eight years.
Central banks around the world have mainly raised interest rates to fight inflation and the focus has been on the Fed. It raised its key rate to a range of 3% to 3.25%. Just over six months ago, this rate was close to zero.
The Fed is expected to raise interest rates by three-quarters of a percentage point at its next meeting in November. Markets were unsettled in part because investors were hoping that any sign of easing inflation or slowing economic growth could signal the Fed easing its rate hikes, which have yet to show signs of easing. significant impact on inflation.
Mary Daly, president of the Federal Reserve Bank of San Francisco, said Friday that she was considering the dangers of raising interest rates too high and doing too much damage to the economy.
While the Fed probably isn’t ready to start scaling back its rate hikes just yet, it said, “I think now is the time to start talking about quitting. Now is the time to start planning for the resignation.
If the Fed emerges from its meeting next month with a fourth consecutive 0.75 percentage point increase in its key overnight rate, as most investors expect, it said, “I would really recommend people not to remove that because: it’s 75 forever.
A jump of 0.75 points is triple the Fed’s usual measure, and the Fed risks creating a recession if it moves too high or too quickly.
Daly’s comments helped lower investor expectations of how high the Fed will raise rates through the end of the year. Traders now expect only a 45% chance that the Fed will raise rates by 0.75 percentage points next month and again by the same amount in December.
Just a day ago they were much more confident about it, assessing a 75% chance. Instead, traders increasingly see the Fed cut to a more modest 0.50 percentage point increase in December, according to CME Group.
Daly was speaking at a policy advisory board meeting at the Fisher Center for Real Estate & Urban Economics at the University of California, Berkeley.
Even though the Fed soon scaled back the scale of its increases, central bank officials also insisted that they planned to leave rates alone at this high level for some time to continue to slow the economy in the hope of bringing down high inflation. .
This story was originally published October 21, 2022 2:37 a.m.