Asian shares bounce back, shrugging off inflation concerns
NEW YORK — Stocks rallied on Wall Street Friday, but not enough to claw back all the losses the market has taken in this volatile week of trading.
The S&P 500 rose 1.7% as of 2: 35 p.m. Eastern. The benchmark index is still on track for its 6th straight losing week, something that hasn’t happened since 2011.
The Dow Jones Industrial Average rose 255 points, or 0.8%, to 31,990 and the Nasdaq rose 3%. Both indexes are headed for weekly losses.
Technology stocks led the gains. Apple rose 2.4%, while Microsoft rose 1.5%. The sector has been the source of much of the volatility in the wider market this week. It has been slipping overall as investors prepare to raise interest rates, which tends to be most detrimental to the stocks that are the most expensive.
Twitter fell 9.4% following Elon Musk’s announcement that he would not be completing his deal to buy the social media company. Tesla gained 4.8%.
Despite Friday’s gains markets have been slumping due to investors adjusting to the highest inflation in 40 years and the higher interest rates that the Federal Reserve is using. This week, the Labor Department released reports that confirmed persistently high consumer prices as well as wholesale prices that have an impact on businesses.
“There’s a lot of issues and rising inflation with a tightening Fed is not the greatest of market conditions, but at some point it’s priced in,” said Jay Hatfield, CEO of Infrastructure Capital Advisors.
Businesses have been struggling to keep up with increased demand for a wide range of products and goods amid supply chain and production problems. They have been increasing prices on everything, from food to clothing. This has put pressure on consumers and raised concerns about a slowing down of economic growth and a pullback in spending.
The Fed is trying to reduce the impact of rising inflation by raising its benchmark short-term rate from its record low near zero. This was where it spent most time during the pandemic. It also indicated that it may increase rates by twice the usual amount at its upcoming meetings. Investors are concerned that the central banks could trigger a recession by raising rates too fast or too high.
Meanwhile, China’s decision to lock down major cities amid worries about a COVID-19 resurgence have further strained supply chains and Russia’s invasion of Ukraine raised already high energy and food costs globally.
Retailers and communications companies also made solid gains. Amazon’s shares jumped 4%, while Google’s parent rose 2.4%.
Bond yields increased significantly. The yield on the 10-year Treasury rose to 2. 93% from 2. 82% late Thursday.
The price of U.S. crude oil rose 4.1% to settle at $110. 49 per barrel. It’s up about 50% for the year.
Investors have also been focusing on the latest round of corporate earnings to gain more insight into how inflation is impacting businesses and consumers. Target, Walmart, and Home Depot will all report their results next week.
Veiga reported from Los Angeles.
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