US stocks opened lower and the sell-off in government bonds settled on Friday, after the latest indication that the Federal Reserve will tighten monetary policy aggressively to fight inflation.
The S&P 500 fell 0.3% shortly after the opening bell, while the tech-heavy Nasdaq Composite was down less than 0.1%. The Dow Jones Industrial Average was down 192 points, or 0.5%. On Thursday, the major US stock indexes It ended with losses.
The sharp rise in government bond yields this week showed signs of stabilizing, with the 10-year Treasury yield hovering at 2.920% in recent trading, the highest since December 2018 and a slight increase from 2.917% Thursday. Earlier on Friday, yields rose before reversing course as the session continued. Yields rise when bond prices fall.
Concerns about inflation and the pace of monetary tightening by the Federal Reserve remained at the forefront of investors’ minds this week and helped drive volatility in major stock indexes. On Thursday, Federal Reserve Chairman Jerome Powell gave investors a clear signal that the central bank is doing just that Willing to tighten monetary policy more quickly It indicated that it is likely to raise interest rates by half a percentage point at its meeting in May.
Next month rate hike, after the Fed A quarter of a percentage point increase in MarchIt will be the first time since 2006 that the central bank has raised the interest rate in successive meetings.
Powell’s comments triggered fresh volatility in a fragile stock market that has been battered this year by the war in Ukraine, driving up inflation and soaring Covid-19 cases in China. Many traders are now concerned that the Fed’s tightening cycle could push the economy into recession as consumers are already feeling uneasy about the economy. Next week, investors will analyze new numbers from the University of Michigan on consumer confidence in April.
Data released by the UK’s Office for National Statistics on Friday showed signs of consumer volatility. UK retail sales volumes fell sharply last month, weakening by 1.4%. This sent the British pound down 1.1% against the dollar to its lowest level since 2020. The London FTSE 100 index fell 0.7%.
“I think what you’re seeing is that consumers are becoming more reluctant,” said Susanna Streeter, senior investment and markets analyst at Hargreaves Lansdown. It is a tough tightrope that central bank policy makers have to walk now. They need to put a lid on the boiling inflation pot, but they don’t want to take the steam out of the economy completely.”
However, for now, investors are encouraged by strong first-quarter earnings. Among the companies that have reported so far, 80% have exceeded analyst expectations. This helped provide some stability to the US stock market. Even with Thursday’s losses, the Dow Jones Industrial Average is currently on track to finish the week 1% higher.
Airlines shares rose.
added 2.2% and
2.7% profit. On Thursday, an American said Sales hit a record high in Marchthe first month since the pandemic began that the company’s total revenue exceeded 2019 levels. The United said it was able to pass on the increase in fuel prices to consumers.
It fell 0.6 percent after the credit card company reported first-quarter net income of $2.10 billion, down from $2.24 billion a year earlier, even as spending on travel and entertainment rose.
It jumped 8.4% after Huggies diapers and Cottonelle raised their sales growth forecast for 2022 and said first-quarter sales increased compared to the previous year.
It is down about 11% after the hospital chain cut its guidance for the year. The company said first-quarter volume and revenue were offset by higher-than-expected inflationary pressures on labor costs.
In commodities, Brent crude, the international benchmark for oil, fell 1.7% to $106.11 a barrel.
In the currency markets, the ICE US dollar index, which measures the currency against another basket, rose 0.3%, on pace for gains this week. Including on Friday, the index rose for all but two sessions in April, Thanks to geopolitical concerns and impending interest rate increases by the Federal Reserve.
In overseas markets, the Stoxx Europe 600 continental index fell 1.3%, dragged down by technology companies including German software companies SAP and
which fell 3.4% and 3.8%, respectively. In contrast, the Swiss cement maker
It rose 4.8% after the company reported sales growth and raised its forecast for the year.
In Asia, Hong Kong’s Hang Seng fell 0.2% and Japan’s Nikkei 225 fell 1.6%. In contrast, the Shanghai Composite Index bucked the trend, up 0.2%.
Write to Caitlin McCabe at [email protected]
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