Shares return with the best week in a month: Markets are folding

(Bloomberg) – US stocks recovered from a catastrophe that pushed the market down for three consecutive weeks as recent comments from Federal Reserve executives boosted the economy and reading inflation expectations eased.

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The S&P 500 gained more than 3% on Friday for its biggest rise since May 2020. That boosted its rise in the week-long holiday shortening to 6.5%, the second best indicator of the year. A bond rally fell on Friday, but the politically sensitive two-year US performance continues to record its biggest weekly drop since mid-May.

As the Treasury Department market began to flash warnings of a recession this week, the mood improved on Friday as the University of Michigan Index of Long-Term Consumer Inflation Expectations fell from the initially reported 14-year high, falling to a 14-year low. the urgent need for sharper interest rate increases. Investors were also reassured by the Fed Chairman of St. Louis, James Bullard, who said concerns about the US recession are excessive.

Fed Chairman Jerome Powell toughened his resolve to cut inflation in testimony to lawmakers this week, but some traders found solace in his comments as a signal that the central bank would take into account the possibility of a recession as it moves to curb inflation.

“We have now seen a couple of days of positive market performance and this is indicative of a very short-term bear rally,” said Sylvia Jablonski, CEO of Defiance ETFs. “The fact that we have passed the Fed meeting and any kind of Fed testimony, ruling out any additional bad news, could continue for the next two days.”

The winning season will be an indication of whether the rally will continue, he said.

Others are still waiting to see how bond markets react to the Fed’s recent comments and economic data.

“The volatility in the fixed income market was even greater than the stock market when you move against the VIX,” said John Flahive, head of fixed income investment at BNY Mellon Wealth Management. “This really supported all the uncertainty in all the capital markets and one of our catalysts that we needed to calm the stock market, to gain some ground, would be to really calm down the bond markets.”

Elsewhere, Bitcoin has risen, hovering around $ 21,000. The dollar fell. West Texas Intermediate crude oil rose after declining in the previous two sessions. The slump in commodity prices has helped keep market-based inflation expectations at bay.

“The Fed seems to have succeeded, at least temporarily, in its mission to cool an overheated economy,” Lewis Grant, a senior portfolio manager at Federated Hermes, wrote in a note to clients. “Commodity prices have fallen from their highs as fears of a recession increase.”

New home sales in the US soared in May, reflecting gains in the West and South and halting the slide of many months as the real estate market adjusted to rising borrowing costs and even higher prices. The increase in sales may reflect some buyers who lock in their mortgage rates in anticipation of even higher borrowing costs.

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Some of the main movements in the markets:

inventories

  • The S&P 500 rose 3.1% at 4 p.m. New York time

  • Nasdaq 100 up 3.5%

  • Dow Jones Industrial Average rose 2.7%

  • MSCI World Index rose 0.4%

currency

  • Bloomberg Dollar Spot Index fell 0.3%

  • The euro rose 0.3% to $ 1.0556

  • The British pound rose 0.2% to $ 1.2284

  • The Japanese yen fell 0.2% to 135.21 per dollar

Links

  • The yield on 10-year bonds increased five basis points to 3.13%

  • Germany’s 10-year yield rose by one basis point to 1.44%

  • Britain’s 10-year yield fell one basis point to 2.30%

Goods

  • West Texas Intermediate crude oil rose 2.9% to $ 107.34 a barrel

  • Gold futures fell 0.1% to $ 1,827.20 an ounce

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