Stocks rise, but still on pace with weekly losses | Economic news

By DAMIAN J. TROISE and ALEX VEIGA, AP Business Writers

Stocks on Wall Street were broadly higher in afternoon trade on Friday after rocking off a pessimistic start, although major indexes are still on course to end in the red for the week.

The S&P 500 was up 0.8% at 3:29 p.m. ET. The benchmark was down 0.9% at the start. The Dow Jones Industrial Average rose 256 points, or 0.8%, to 31,033, while the tech-heavy Nasdaq rose 0.5% after tech stocks fell.

The latest choppy trading comes a day after the S&P 500 closed its worst quarter since the pandemic began in early 2020. Its performance in the first half of 2022 was the worst since the first six months of 1970.

The S&P 500 has been in a bear market since last month, meaning an extended decline of 20% or more from its most recent peak. It is now down 21% from its peak at the start of this year.

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The deep market slump this year reflects investors’ concern about rising inflation and the possibility that higher interest rates could lead to a recession.

“What we’re seeing today really reflects what we’re going to see here in July, which is continued pressure in the markets, unless we see outsized economic reports on jobs or inflation, or a change more significant of Fed policy,” said Greg Bassuk, CEO of AXS Investments.

Bond yields fell significantly. The 10-year Treasury yield, which helps set mortgage rates, fell to 2.89% from 2.97% last Thursday. The 2-year Treasury yield slipped to 2.83% from 2.92%.

The latest market swings precede a long holiday weekend. Financial markets in the United States will be closed on Monday for Independence Day.

Wall Street remains concerned about the risk of a recession as economic growth slows and the Federal Reserve aggressively raises interest rates. The Fed is raising rates to deliberately slow economic growth to calm inflation, but could potentially go too far and trigger a recession.

Economic data for the past few weeks has shown that inflation remains high and the economy is slowing. The latter raised hopes on Wall Street that the Fed will eventually ease its aggressive pressure to raise rates, which has weighed on equities, especially more expensive sectors like technology. Analysts do not expect equities to rally until there are solid signs that inflation is easing.

Friday’s latest economic update for the manufacturing sector shows a continued slowdown in growth in June, sharper than economists expected. A report on Thursday showed a measure of inflation closely watched by the Fed rose 6.3% in May from a year earlier, unchanged from its level in April.

Earlier this week, a worrying report showed consumer confidence slipping to a 16-month low. The government also reported that the US economy contracted at an annual rate of 1.6% in the first quarter and weak consumer spending was a key driver of the contraction.

Kohl’s plunged 16.9% after the department store’s potential sale slumped amid a fragile retail environment as consumers lost confidence and cut spending. Kohl’s had entered into exclusive talks with Franchise Group, which owns Vitamin Shop and other outlets, for a deal potentially worth around $8 billion.

Other retailers, restaurant chains and businesses that rely on direct consumer spending have helped boost the market. Amazon rose 3%, Home Depot gained 1.8% and Starbucks rose 3.7%.

Banks also recorded gains. Wells Fargo rose 2.1%.

Tech stocks recovered some of their losses from earlier in the day, although some big names remained in the red. Chipmaker Micron lost 3.1% after giving investors a disappointing profit forecast amid concerns over falling demand. This weighed heavily on other chipmakers. Nvidia fell 4.1%.

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