Economy
Stocks Edge Higher, Remain Turbulent Amid Recession Worries
Stocks turned slightly higher in morning trading on Wall Street today, shaking off an early loss; albeit, markets remained turbulent amid concerns about inflation and whether rising interest rates will help or hinder the economy.
The S&P 500 rose 0.4 per cent. The Dow Jones Industrial Average rose 65 points, or 0.2 per cent, to 30,595 and the Nasdaq rose 0.9 per cent.
The choppy trading follows a solid rally yesterday (Tuesday) in what has been a turbulent period for the broader market, with daily and sometimes hourly swings from sharp gains to losses.
The benchmark S&P 500 is currently in a bear market, which means it has dropped more than 20 per cent from its most recent high, which was in January 2022. It has also fallen in 10 of the last 11 weeks but is holding on to gains so far for this week.
Much of the loss has been tied to concerns about rising inflation and the Federal Reserve’s plan to aggressively raise interest rates in order to temper inflation’s impact on consumers and businesses.
The Fed’s moves are happening as some discouraging signals have emerged about the economy, including sagging spending at retailers and soured consumer sentiment. The worries over inflation and interest rates have been worsened by a spike in energy and other key commodity prices following the Ukrainian war.
Record high gas prices have been taking a bigger bite out of consumers’ wallets and prompting a slowdown in spending elsewhere.
Inflation is at a four-decade high in the US and has been prompting businesses to raise prices on everything from food to clothing. Consumer spending remained strong through most of the pandemic but has been falling amid tighter pressure from inflation.
Inflation is hitting records globally. Britain’s inflation reached a 40-year high of 9.1 per cent in the 12 months to May 2022.
Solid gains from big technology and health care companies helped offset steep losses from energy companies. Microsoft rose 1.2 per cent and Eli Lilly rose 2.3 per cent. US crude oil prices fell 4.7 per cent. Chevron fell 3.4 per cent.
Bond yields fell sharply. The yield on the 10-year Treasury fell to 3.14 per cent from 3.30 per cent late Tuesday. Markets in Europe and Asia also fell.
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