Michelle ThompsonAs stocks continue to fall on Friday, Wall Street is on course to end the first negative week in three weeks.
After three days of falls, the S&P 500 was 0.2% higher. At 9:40 a.m. Eastern time, the Dow Jones Industrial Average was down 5 points, or less than 0.1%, at 34,495, while the Nasdaq composite was up 0.4%.
Stocks have been under pressure this week due to concerns that an overheated economy will force the Federal Reserve to maintain high interest rates for an extended period of time. Following news that the U.S. economy is still strong despite much higher rates and difficulties facing other countries around the world, traders have called off some bets that the Fed will decrease interest rates next year.
Bond market yields have increased as a result of these concerns, which lowers stock prices. However, Friday saw a decrease in yields, which helped to calm Wall Street a little bit.
By late Thursday, the yield on the 10-year Treasury fell from 4.25% to 4.23%. The yield on the two-year Treasury, which more closely mirrors Fed views, decreased from 4.95% to 4.94%.
Companies have essentially finished reporting their spring earnings results, but a handful were still making some significant moves on Friday.
After the gun manufacturer released better-than-anticipated statistics for the three months ending in July, Smith & Wesson Brands saw an 18.9% increase. Although the company typically has lower sales over the summer, they were up 35% from the previous year.
After fluctuating between gains and losses in the wake of its results release, Kroger was 0.4% higher. The supermarket’s profit for the most recent quarter exceeded experts’ estimates, but its revenue lagged behind.
The following week might be busier for markets around the world. The focus will probably be the latest monthly report on US inflation, which is due on Wednesday. According to economists’ predictions, consumer prices rose 3.6% in August compared to the same month last year.
Since reaching a peak of over 9% last summer, inflation has generally been declining, but there is concern that the final decline to the Fed’s 2% target may be the most challenging. Strong economic reports have recently alarmed the market, which is why. They might be encouraging Americans to keep spending, which would drive businesses to try to raise prices even further.
The economy is intended to slow down and the job market to suffer as a result of high rates, which should help to reduce inflation. The highest rates in more than 20 years, however, have not yet achieved that. Threatening to do so may force the Fed to increase rates once more or, at the very least, keep them high for longer than anticipated by investors.
Next week will also bring a rate decision from the European Central Bank and additional information about the Chinese economy. Since the anti-COVID regulations were lifted, China’s recovery has fallen far short of forecasts, which has eliminated a significant source of growth for the global economy while also easing some of the pressure on inflation to rise.
Japan’s Nikkei 225 fell 1.2% on international stock exchanges after news that the third-largest economy in the world expanded at a 4.8% annual rate in the April-June quarter. The earlier estimate of 6% growth is weaker than this.
In much of the rest of Asia, indexes were slightly lower, but slightly higher in Europe.
