Dow closes over 650 points on retail spending data

US stocks rebounded on Friday, capping a volatile week during which investors tried to reconcile a string of corporate earnings reports with data that at times seemed to provide conflicting narratives about the economic outlook.

Major indices rose to the end of the week in a new round of bank earnings and data that showed retail sales rose more than expected in June. They earlier stumbled upon a new reading showing inflation so far Another rise for four decades Some of the largest US banks also announced disappointing quarterly results.

The S&P 500 rose 72.78 points, or 1.9%, to 3,863.16 on Friday, snapping a five-session losing streak. Financial stocks contributed to the index’s gains.

City

The group increased by 13%,

State Street

9.7% added and

Wells Fargo

It rose 6.2%.

The technology-focused Nasdaq Composite rose 201.24 points, or 1.8%, to 11,452.42, and the Dow Jones Industrial Average rose 658.09 points, or 2.1%, to 31,288.26.

All three indices suffered weekly losses. The S&P 500 is down 0.9%, the Nasdaq is down 1.6% and the Dow is down 0.2% for the week.

Brad MacMillan, chief investment officer at Commonwealth Financial Network, said market volatility could be a sign that sell-offs in 2022 are nearing the bottom. He said corporate stock prices are now more in line with expected earnings, and many investors are already taking into account the effects of higher interest rates.

“We are at the bottom stage,” said Mr. Macmillan. “What you see now depends on whether you see earnings as good or bad. Yesterday was bad, but we are still seeing expected earnings growth.”

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The S&P 500 index recently traded at 16 times its expected earnings over the next 12 months, down from 21.5 times at the end of last year, according to FactSet. Analysts expect quarterly earnings to rise 4.2% last quarter, according to FactSet.

Investors are trying to assess how officials will balance the need to tame inflation with fears of a possible recession. US consumer inflation Accelerated to 9.1% in JuneA pace not seen in more than four decades, which reinforced expectations among traders that the Federal Reserve Will raise interest rates More powerfully to tame it. At the same time, tighter financial conditions could affect growth.

With more than two-thirds of US economic activity related to family spendingRecessions are often accompanied by a decline in consumers. However, the Commerce Department reported that Americans Retail spending rose 1%. In June of the previous month, after the decline in May.

“You don’t get a recession by adding 6 million jobs or having consumer spending that isn’t shrinking,” MacMillan said. “A large part of the retail report was just inflation. But on the other hand, sales aren’t declining either. That doesn’t mean ‘stagnation.'”

Consumer sentiment in the US stabilized in early July, remaining at low levels amid concerns about inflation and the upcoming economic recession. The preliminary estimate of the University of Michigan’s Consumer Confidence Index published on Friday rose to 51.1 in July from 50.0 in June, hovering near an all-time low.

“Recession risks have risen since the beginning of the year,” said Mike Bell, global market strategist at JP Morgan Asset Management. “If we don’t get any indication that the consumer is shrinking, it may not be as bad as people fear, but if we recognize that it is an indication that the risk of recession is materializing.”

With inflation soaring in the United States, rising food and energy costs have pushed the country’s most popular price index to a four-decade high. WSJ’s Gwynn Guilford explains how the CPI works and what it can tell you about inflation. Illustration: Jacob Reynolds

City Group

And Wells Fargo were among the financial companies that announced their earnings before the market opened, leading to a revival in the banking sector. City Spread Better than expected profit and revenue, while Wells Fargo said a slowdown in mortgage lending hurt its results. State Street also beat Wall Street expectations.

US Bancorp

He won $2.32, or 5.2%, to $46.57, while

American bank

It rose $2.12, or 7%, to $32.25.

As a group, financial stocks in the S&P 500 rose 3.5%.

shares

Pinterest

It jumped $2.84, or 16%, to $20.40. The Wall Street Journal reported that activist investor Elliot Management has I took a big share In a social media company.

Phung Holdings

Shares rose $1.33, or 6.8 percent, to $20.98, after the Swedish telecom equipment giant

Ericsson

The Committee on Foreign Investment in the United States said authorized its proposal of $6.2 billion to buy the company.

United Health Group

The stock added $27.32, or 5.4%, to $529.75 after the company raised her gaze For the second consecutive quarter, it achieved the highest revenues and profits for the recently ended period.

In the bond markets, the yield on the benchmark 10-year Treasury fell to 2.929% from 2.957% on Thursday. Yields and prices move inversely.

The S&P 500 and Dow on Friday broke a five-session losing streak.


picture:

Michael M. Santiago / Getty Images

In energy markets, Brent crude, the international benchmark for oil prices, rose 2.1% to $101.16 a barrel.

Offshore, the Stoxx Europe 600 continental index is up 1.8%, although the index is down this week. Italian political turmoil He fears the Kremlin will do so Final supplies The Nord Stream pipeline that directs Russian natural gas to Europe has heightened recession fears on the continent.

In Asia, China’s Shanghai Composite Index is down 1.6%, and Hong Kong’s Hang Seng Index is down 2.2%. China registered The weakest growth rate in more than two yearsa measure of the costs imposed on the world’s second-largest economy by Beijing’s zero-tolerance approach to Covid-19.

Write to Caitlin Ostroff at [email protected] and Justin Baer at [email protected]

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