NEW YORK –
Stocks on Wall Street shook off a bearish start and closed broadly higher on Friday, though the rally was not enough to erase the week’s losses.
The S&P 500 rose 1.1% after being down 0.9% earlier. The gain snapped a four-day losing streak for the benchmark index, which still posted its fourth losing week in the last five.
The Dow Jones Industrial Average rose 1%, while the tech-heavy Nasdaq gained 0.9% after the sell-off in tech shares eased.
The latest irregular trading comes a day after the S&P 500 closed its worst quarter since the start of the pandemic 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 a prolonged drop of 20% or more since its most recent peak. It is now down 20.2% from the high it set earlier this year.
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 fell to 2.83% from 2.92%.
The deep market decline this year reflects investors’ anxiety about rising inflation and the possibility that higher interest rates will trigger a recession.
“What we’re seeing today really mirrors what we’re going to see here in July, which is continued pressure on the markets, unless we see outsized economic reports on jobs or inflation, or some more significant change in policy from the Fed,” said Greg Bassuk, CEO of AXS Investments.
The S&P 500 rose 39.95 to 3,825.33. About 85% of the stocks in the index finished higher.
The Dow gained 321.83 points to 31,097.26, while the Nasdaq rose 99.11 points to 11,127.85. The Russell 2000 index of smaller companies rose 19.77 points, or 1.2%, to 1,727.76.
The latest market gyrations precede a long holiday weekend. Financial markets in the US 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 purposely slow economic growth and help cool inflation, but it could go too far and cause a recession.
Economic data in recent weeks has shown that inflation remains high and the economy is slowing. The latter has raised hopes on Wall Street that the Fed will eventually ease its aggressive push to raise rates, which has been weighing on stocks, especially in more expensive sectors like technology. Analysts don’t expect much of a rally in stocks until there are strong signs that inflation is cooling.
Friday’s latest economic update for the manufacturing sector shows a continued slowdown in growth in June that was more pronounced than economists expected. On Thursday, a report showed that 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 that consumer confidence fell to its lowest level in 16 months. The government has also reported that the US economy shrank at a 1.6% annual rate in the first quarter and weak consumer spending was a key part of that contraction.
Kohl’s plunged 19.6% after department store sales potential collapsed amid the shaky retail environment as consumers lose confidence and cut back on spending. Kohl’s had entered exclusive talks with Franchise Group, the owner of the Vitamin Shop and other retail outlets, for a deal potentially worth around $8 billion.
Other retailers, restaurant chains and businesses that rely on direct consumer spending helped lead the market rally. Amazon rose 3.2%, Home Depot gained 1.8% and Starbucks rose 3.8%.
Banks and health care stocks also posted gains. Wells Fargo rose 1.9% and Johnson & Johnson closed 1.1% higher.
Tech stocks largely recovered from their morning slide, though many closed lower. Chipmaker Micron fell 3% after giving investors a disappointing earnings forecast amid concerns about falling demand. That weighed heavily on other chipmakers. Nvidia fell 4.2% and Qualcomm lost 3.3%.