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What Investors Are Looking For As Stocks Rally on Wall Street

US stocks opened higher on Friday, adding a glimmer of optimism amid a week of volatility and sharp declines record inflationFears and expectations of a growing recession additional rate hike by Fed.

As of 10:39 am Friday, the S&P was up 61 points, or 1.6%, at 3,851, while the Dow was up 1.9% at 31,223. The tech-heavy Nasdaq rose 1.3%.

Wall Street is assessing the latest government reports showing that inflation remains hot and shows no signs of cooling, even as central banks keep their grip on businesses and consumers by raising interest rates. try to loosen up. But markets have been up for it for months, buying on the downside and looking for a silver lining, as new government data on Friday shows strong consumer spending in June.

“Within the gloom, buyers are looking for some optimism,” IG’s Jun Rong Yep said in a report. “Guidance for economic conditions from major US banks points to an impending recession, but it has come with firming consumer spending and the labor market easing the risks of a severe US recession.”

The Commerce Department said on Friday that Americans’ retail spending in June rose 1% compared to the previous month, after declining in May. This provided some enthusiasm for investors, given that consumer spending represents the bulk of US economic activity.

“While consumer sentiment is very weak, this does not mean they will stop spending,” said Cathy Bosjanic, chief US economist at Oxford Economics, in a research note.

inflation concerns

However, inflation and the Federal Reserve’s fight against it remain major concerns for investors. Inflation at the wholesale level climbed 11.3% in June from a year ago. It’s the latest painful reminder that inflation is running hot, after a report on Wednesday that consumer-level prices were up 9.1% last month compared to a year ago.

Widespread inflation has been squeezing businesses and consumers for months and the Federal Reserve has aggressively tried to drive prices down by raising interest rates. This has raised concerns that it could go too far and actually lead to a recession.


Fed rate hike forced home buyers out of the market

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Bank stocks have taken heavy losses this year as investors worry about the Federal Reserve pouring out the US economy in recession To counter inflation. A recession would mean some Americans would lose jobs, and possibly start falling behind on their debts. These fears have more than offset the higher revenue earned by banks from higher interest rates.

JPMorgan Chase’s profits fell 28% in the second quarter, the bank reported on Thursday, as it tries to navigate an economy that is showing strength in several sectors but is losing steam in the middle. rising interest rates Which affected consumers and businesses alike.

In the coming weeks, investors will get a clearer picture of how much inflation is hurting companies. Several more US banks are set to report earnings on Friday, including Citigroup and Wells Fargo, along with insurer UnitedHealth Group.

In other trade, US benchmark crude oil rose 24 cents to $96.02 a barrel. On Thursday, it fell 52 cents to $95.78 a barrel.

Brent crude, the pricing base for international trade, rose 73 cents to $99.83 a barrel.

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