US stock futures are higher, suggesting that markets may see a comfortable rush at the end of a week of losses across the major indexes.
S&P 500-related futures rose 1.2% on Friday, while Dow Jones Industrial Average futures rose 0.9%. The high-tech Nasdaq 100 contracts jumped 1.8%. Stocks closed Thursday mixed after major indexes saw a rally late in the session that finally pushed the Nasdaq Composite into positive territory.
Even with potential gains looming at the market open on Friday, US stocks are still on track to end the week sharply lower. As of Thursday’s close, the S&P 500 and Nasdaq composite indexes were down 4.7% and 6.4% for the week, respectively, at the pace of their worst weekly performance since late January. Meanwhile, the Dow is on track to fall 3.6% and extend its losses to the seventh consecutive week – its longest losing streak since 2001.
The sell-off in the US stock market this week came as investors had to realize the increasing risk of a recession, as the Federal Reserve tries to control inflation. Many institutional and individual investors alike are beginning to dismiss the idea that the Fed can engineer a so-called soft landing, during which inflation declines while unemployment remains low and the economy continues to grow.
On Thursday, Federal Reserve Chairman Jerome Powell acknowledged that controlling inflation could take a short-term blow to the economy, saying on a Marketplace radio show that “the process of bringing inflation down to 2% will also involve some pain.” He reiterated his view that additional increases of half a percentage point would likely be appropriate in future meetings, but said the central bank might consider larger increases if economic data called for such steps.
This week’s inflation report offered little solace to investors, especially after data showed that price pressures were fairly broad-based. Even as gasoline prices fell, so did the prices of groceries, as well as dining out, air travel and other services, alarming investors who had hoped inflation had peaked.
This has forced many to sell riskier investments and pile them into assets that are seen as safer. Growth and technology stocks, which tend to be hurt by rising interest rates, in particular, are off. But risk aversion sentiment has spread elsewhere, leading to sharp drops in cryptocurrencies as well.
“This week has been a pivotal point in the markets. The mood has changed from assessing whether we can survive in an economy with higher rates to [investors] He asked, “Are we on the verge of a recession?” said Florian Ilbo, Head of Macro at Lombard Odier Investment Managers.
But on Friday, technology stocks were among those that led the recovery. TeslaAnd
Both Nvidia and Netflix jumped 2.6% or more before marketing.
Robinhood’s price is up 21% in the primary market after Sam Bankman-Fried, founder of cryptocurrency exchange FTX, revealed that he had bought a 7.6% stake in the brokerage.
Bitcoin rose 5.7% to around $3,0205 on Friday, from the 5 pm ET level of $2,8572.24 on Thursday. Elsewhere in the crypto markets, however, the beleaguered stablecoin TerraUSD continues to slide, trading at 11 cents at 4 AM ET. The so-called stablecoin with its typical $1 correlation, TerraUSD broke through this level at the end of last week after the token sell-off. Sister token Luna has also fallen sharply this week, trading at half a penny at 4am, down from over $60 on Monday.
In the bond market, the yield on the benchmark 10-year US Treasury rose to 2.915% from 2.815% on Thursday, reversing the four-day yield decline that came as investors once again piled into bonds. Yields rise when bond prices fall.
The WSJ dollar index, which measures the greenback against a basket of other currencies, fell 0.2%, on track to break a six-day winning streak.
Overseas stock markets were also trading higher on Friday. In Europe, the Stoxx Europe 600 Continental Index was up 1.1%. In Asia, Hong Kong’s Hang Seng rose 2.7%, while Japan’s Nikkei 225 climbed 2.6%. The Shanghai Composite Index is up 1%.
—Caitlin Ostrov contributed to this article.
Write to Caitlin McCabe at [email protected]
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