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Wall Street closes worst week since 2020 with slight gain

NEW YORK — Wall Street closed its most painful week since the coronavirus crash of 2020 with a winding trading day on Friday that left it slightly higher.

Them&P 500 rose 8.07 points, or 0.2%, to 3,674.84 after hovering between losses and modest gains for most of the day. The Dow Jones Industrial Average fell 38.29, or 0.1%, to 29,888.78, while the Nasdaq composite climbed 152.25, or 1.4%, to 10,798.35.

The relatively quiet trading capped off a brutal and tumultuous week for Wall Street. Them&P 500 lost 5.8% for its tenth decline in the past 11 weeks. It’s its worst week since March 2020, when stocks plummeted as the global economy came to a sudden halt at the start of the pandemic.

Markets around the world are shaking as investors adjust to the bitter medicine of higher interest rates that the Federal Reserve and other central banks are increasingly doling out. Higher rates can lower inflation, but they also risk a recession by slowing the economy and lowering the prices of stocks, bonds, cryptocurrencies, and other investments.

“Any lack of clarity or confidence in the Federal Reserve is going to create a lot of volatility in the market,” said Megan Horneman, chief investment officer at Verdence Capital Advisors.

Them&P 500 remains in a bear market after falling more than 20% below its record high earlier this week. It is now 23.4% below its all-time high set in January and back to where it was at the end of 2020.

“There’s a lot of uncertainty right now about the timing of a recession, but the risks are clearly increasing,” Horneman said.

The Fed on Wednesday raised its main short-term interest rate to three times the usual amount for its biggest increase since 1994. It may be eyeing another mega-hike at its next meeting in July, but the Fed Chairman , Jerome Powell, said increases of three-quarters of a percentage point would not be common.

The Fed has also just started allowing some of the trillions of dollars of bonds it bought during the pandemic to come off its balance sheet. This should put upward pressure on longer-term interest rates and is another way for central banks to withdraw previously buoyant supports under the markets to support the economy.

The Fed’s moves come as some discouraging signals have emerged about the economy, even though the job market remains strong. The latest was a report released on Friday showing that the country’s industrial production was weaker than expected last month. Other disappointing data, including lower spending at retailers and weakening consumer confidence, raised concerns that the Fed’s actions may be too aggressive.

Powell will testify before Congress next week on monetary policy, and what he says is sure to guide the discussion. The testimony is scheduled for Wednesday and Thursday, which could mean steeper swings for Wall Street.

In the six days since a groundbreaking report showed US inflation accelerating, not falling as investors had hoped, the S&P 500 had three days where it fell at least 2.9%. This has happened only five other times in total over the past year.

For Friday at least, trading was quiet as Treasury yields fell further from their highest levels in more than a decade and some jitters on Wall Street subsided.

The 10-year Treasury yield fell back to 3.23% from 3.30% Thursday night and after peaking near 3.50% earlier in the week.

Higher yields have hit all kinds of investments this year, but the hardest pain has been in cryptocurrencies, high-growth tech stocks and others that flew the highest in the easier early days of trading. ultra-low rate.

Tech stocks’ gains on Friday helped the Nasdaq lead the market. Amazon climbed 2.5% and Nvidia 1.8%.

Other stocks were particularly hard hit on Thursday by fears of a possible recession, and crippling consumer inflation also rebounded. Norwegian Cruise Line rose 10.1% and American Airlines Group gained 6.4%. However, both were still down more than 12% for the week.

Smaller company stocks, which tend to move more in line with expectations for the strength of the US economy, also outperformed the rest of the market. The Russell 2000 Small Stock Index rose 15.86, or 1%, to 1,665.69. But it was also still much lower for the week at 7.5% than the broader market.

US markets will be closed on Monday for the June 16 public holiday.

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Post expires at 6:20pm on Tuesday June 28th, 2022