Major stock indexes rose on Friday, ending their best month since 2020, to make up for some of their losses from a poor first half.
The S&P 500 rose 9.1% in July, while the Dow Jones Industrial Average rose 6.7%, the strongest monthly showing for each index since November 2020. The heavyweight Nasdaq Composite rose 12% in its best month since April 2020.
Investors have gotten comfortable in recent days with the idea of this slowing economic growth The Fed may encourage To raise prices at a slower clip. They were also encouraged by positive signals during earnings season, as expectations of quarterly earnings growth rose over the past month.
But money managers and strategists are also debating whether stocks can hold on to recent gains in the face of Continued tightening of monetary policy And worrying signs about the economy. Many are skeptical.
“The market appears to have prematurely declared victory over inflation,” said Samir Samana, senior global market analyst at Wells Fargo Investment Institute. “It’s quite far from what the Fed and President Powell set out this week.”
Friday’s S&P 500 Index rose 57.86 points, or 1.4%, to 4,130.29. Dow Industries added 315.50 points, or 1%, to 32,845.13. The Nasdaq Composite Index rose 228.09 points, or 1.9%, to 12,390.69. All three metrics ended the week with gains.
However, the major indices remain deep in negative territory for 2022, after the S&P 500 ended June with worst first half Since 1970. The index is now down 13% for the year.
Conflicting economic signals are forcing investors to chart their paths forward without a clear view of how business conditions will develop in the coming months. Thursday’s data showed the US economy contraction for the second consecutive quarter, which meets a common definition of a recession. At the same time, employers continued to add jobs and the unemployment rate remained low.
“It’s a strange dynamic of having a really strong business environment with a weaker economic environment,” said Michael Vogelzang, chief investment officer at Captrust, based in Raleigh, North Carolina. “I don’t think anyone can really really understand where this is going to happen without more data.”
Friday’s data showed strong growth in consumption and wagesThis could put pressure on the Federal Reserve to raise interest rates to control inflation. Workers’ wages and benefits rose 1.3% in the second quarter — a near record pace — and Consumer spending rose 1.1% in June, accelerating from May.
Federal Reserve Chairman Jerome Powell said the central bank raised interest rates by three-quarters of a percentage point and signaled the possibility of more significant increases to combat high inflation. Photo: Manuel Balce Ceneta / AP
Friday’s gains were broad-based, with nine of the S&P 500’s 11 sectors advancing. The Energy group led the way with a gain of 4.5%, while the Consumer Goods sector edged up last, down 0.7%.
between individual stocks,
Shares fell $9.15, or 6.2 percent, to $138.91 after the maker of Gillette shavers and laundry products, Ariel, said buyers were Start cutting spending After months of rapid inflation.
Shares jumped $12.67, or 10%, to $134.95 after the tech company said Quarterly revenue grew faster than analysts expected.
Shares added $5.16, or 3.3%, to $162.51 after it reported iPhone sales keep growing in the last quarter.
High energy prices soar chevron It posted a profit of $11.6 billion in the second quarter, sending shares up $13.39, or 8.9%, to $163.78. fellow oil giant
Spread Earning $17.9 billion, The stock rose $4.29, or 4.6%, to $96.93.
In the bond market, the yield on US 10-year Treasury notes fell to 2.642% on Friday from 2.680% on Thursday. Yields move in the opposite direction to bond prices, and It has decreased in recent weeks Based on expectations, the Fed will soon slow the pace of rate hikes.
Meanwhile, the yield on the two-year US Treasury bond settled on Friday at 2.897%. This extends the extent to which a short-term bond trades with a higher yield than its long-term counterpart, a situation known as an inverted yield curve that is seen as a warning of a possible recession.
Investors are keeping a close eye on any hint from the central bank about the future course of monetary policy.
After raising the benchmark interest rate by 0.75 percentage points for the second consecutive meeting on Wednesday, the Federal Reserve signaled that At some point it will probably subside To measure the effects of higher rates on the economy. About 73% of the S&P 500 companies that reported quarterly results have beat earnings expectations, pacifying money managers who fear earnings will start to fall.
But many investors remain cautious about the outlook for the economy and stocks. with Inflation at its highest level in 40 yearsSome say central banks in the US and elsewhere will still be in a hurry to raise interest rates. Data showing the US economy contracting for the second consecutive quarter added to the tension.
“The main idea is that they don’t fall off a cliff,” Brian O’Reilly, head of market strategy at Mediolanum International Funds, said of earnings. “Consumer demand is still relatively strong.”
However, Mr. O’Reilly said he believes the stock’s rebound will fade. “We are still facing a very difficult economic background,” he said, adding that there were few indications that inflation had peaked.
Traders are working on the floor of the New York Stock Exchange this week.
picture:
Spencer Platt / Getty Images
Foreign markets were mixed. The Stoxx Europe 600 Index is up 1.3%.
Chinese stocks fell after the quarterly government economic meeting failed to deliver a stimulus package. The Politburo, China’s top policy-making body, acknowledged Thursday that the country will do so Missing annual growth target this year. She indicated that the government will adhere to zero-tolerance measures against Covid-19 and only take cautious steps to support the faltering real estate market.
Hong Kong’s benchmark Hang Seng Index fell 2.3%. China’s Shanghai Composite closed 0.9% lower.
The sale of Chinese technology shares came on the heels of a Wall Street Journal report that billionaire Jack Ma is Planning to give up control Ant, a subsidiary of
The move could delay Ant’s initial public offering by a year or more.
Elsewhere in Asia, Tokyo’s Nikkei 225 was flat, while South Korea’s Kospi Composite was up 0.7%.
Write to Karen Langley at [email protected] and Joe Wallace at [email protected]
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