US stocks opened higher on Friday after a grueling week of losses across the major indexes.
The S&P 500 rose 1.1% shortly after the opening bell. The Dow Jones Industrial Average added 259 points, or 0.8%, and the Nasdaq Composite Index added 1.8%.
Twitter TWTR -9.46%
Shares tumbled 10% after Tesla CEO Elon Musk tweeted that his deal to buy the social media company and make it private was “temporarily on hold”, with pending details about the amount of fake accounts on the social media platform. Mr. Musk later tweeted that he was committed to the acquisition, helping Twitter cut losses by more than 20% before the opening bell. Tesla stock jumped 5.9% after Mr. Musk’s tweets.
The moves higher in the broader market came after a rally late in the session on Thursday helped the Nasdaq Composite Index gain. Risk sentiment has been trading in international stock markets overnight. By Friday morning in the US, investors were collecting stocks of shabby tech companies before the opening bell
Investors described the recovery as a respite from the market selling that put all three major US indexes on pace for their worst week since late January. As of Thursday’s close, the Nasdaq Composite is down 6.4% this week. 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.
“This may be just a bullish buy-on-back and an extreme cat bounce more than anything else,” said Greg Swenson, co-founder of Brig MacAdam, a London-based investment bank. He said he expects more losses for the US stock market, given the future. “Even the big companies will suffer from the market.”
Investors are currently facing problems not seen in decades as inflation continues to hover near a four-decade high. Many traders are now dealing with the increased risk of a recession as the Federal Reserve tries to control pricing pressures. 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. Nvidia added 3.6%, PayPal added 3.0% and Netflix added 2.6%.
Robinhood stock surged 19% after Sam Bankman-Fried, founder of cryptocurrency exchange FTX, revealed that he had bought a 7.6% stake in the brokerage. Duolingo jumped 22% after the language learning platform reported a sharp jump in revenue and monthly active users.
Bitcoin rose to around $30,419 on Friday, from the 5pm ET level of $28,572.24 on Thursday. Elsewhere in the crypto markets, however, the beleaguered stablecoin TerraUSD continued to slide, trading at 11 cents. 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, down from over $60 on Monday.
In the bond market, the yield on the benchmark 10-year US Treasury rose to 2.906% 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 US currency against a basket of other currencies, rose 0.1%. As of Thursday, it has been trading higher for six consecutive sessions, gaining about 2.3% over the period.
Overseas stock markets were also trading higher on Friday. In Europe, the Stoxx Europe 600 Index across the continent is up 1.6%. 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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