U.S. stocks wavered Friday, with major indexes extending the whipsaw moves that have injected fresh volatility into markets this week.
The S&P 500 was recently down 0.8%. The Dow Jones Industrial Average lost 0.9%, while the Nasdaq Composite was about flat. All three major indexes fell Thursday, closing at their lowest levels since 2020. Thursday’s decline reversed a rally in stocks Wednesday.
Stock indexes are on track to finish the week with sharp losses as investors assess inflation, central banks’ response to it and the outlook for the global economy. The Federal Reserve earlier this week approved the largest interest-rate increase since 1994 and signaled it would continue lifting rates this year at the most rapid pace in decades to fight inflation.
Recent rate increases have reversed a prior cycle of loosening monetary policy that allowed prices for both stocks and bonds to rally in recent years. Prospects for repeated rate rises throughout the rest of the year have caused investors to sell out of both assets and lent to fears that rapid tightening could reduce growth. U.S. mortgage rates recently reached their highest level in more than 13 years. Recent economic data have shown sharp declines in key sectors.
“The central banks, who have been our friends for a very long time, are telling us we should expect pain,” said Hani Redha, a portfolio manager at PineBridge Investments. “That inflation number is the only thing that matters right now. Even if we see growth slowing a lot, that will not be enough to cause the Fed to change course.”
Mr. Redha said it is possible that inflation could still climb further in the coming months as energy prices remain elevated. Brent crude, the international benchmark for oil prices, edged down 2.4% to $117.03 a barrel.
European natural-gas prices edged down 0.6% Friday, putting them up almost 50% for the week. Moscow’s move to slash natural-gas exports to Europe this week has pitched the continent’s energy crisis into a dangerous new phase that threatens to drain vital fuel supplies and kneecap the continent’s economy.
Signs remained that investors sought assets viewed as safe to hold, such as the U.S. dollar and U.S. government bonds. The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, rose 0.9%. In bond markets, the yield on benchmark 10-year Treasurys ticked down to 3.262% from 3.303% Thursday. Yields fall as prices rise.
The dollar value of bitcoin and other cryptocurrencies showed tepid signs of stabilizing after tumbling sharply over the 10 days prior. Bitcoin was roughly unchanged from its 5 p.m. ET level Thursday to trade at $20,637 Friday. Cryptocurrencies have been hit by rising interest rates that are sapping appetite for riskier assets, and concerns about select projects and companies in the crypto ecosystem.
Shares of Adobe fell 4.1% after the provider of software for creativity, marketing, and documents gave softer-than-expected guidance.
Overseas, the pan-continental Stoxx Europe 600 added 0.7%. Shares of commodity mining and trading giant Glencore added 0.8% in London trading after the company raised price and cost guidance for its coal operations and said that its trading business is outperforming expectations.
In Asia, the Bank of Japan maintained ultralow interest rates on Friday, confirming that it won’t join the Federal Reserve and other major global central banks in tightening monetary policy. Japan’s Nikkei 225 stock index fell 1.8% and the Japanese yen fell 1.8% against the dollar.
South Korea’s Kospi edged down 0.4%, while China’s Shanghai Composite added 1%.
Write to Caitlin Ostroff at [email protected]
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