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Shares end the turbulent week with a rally

A new group of bank revenues and economic data on Friday morning increased investors’ optimism about the state of the economy and reduced concerns that the Federal Reserve could raise interest rates by a full percentage point at the meeting later this month.

The Dow (INDU) unofficially ended the day up 658 points, or 2.2%. The S&P 500 (DVS) added 1.9% and Nasdaq (NDX) increased by 1.8 percent.
New earnings reports from Wells Fargo and Citigroup before the clock were well received by the markets, especially after JPMorgan (JPM) and Morgan Stanley (MS) lost estimates on Thursday.

All the big averages ended the week in red. The Dow index fell 0.2 percent. S&P and Nasdaq fell 0.9% and 1[ads1].6%, respectively.

Citigroup (C) beat estimates and reported that they earned on rising interest rates. Shares rose by almost 15 percent. Wells Fargo (WFC) reported quarterly earnings declines of 48%, but the stock still rose 6%.
A red-hot inflation reading earlier this week made markets buzz: The consumer price index, reported Wednesday, rose 9.1% year-on-year, the highest rate since 1981. But strong retail sales for June and preliminary consumer sentiment data released Friday helped bend markets and light voltages.

Consumption spending accounts for about two-thirds of the US economy. Given Friday’s good reports, the US economy may have grown in the second quarter, avoiding two consecutive quarters of a shrinking economy – a scenario some economists call a technical recession – noted Jeffrey Roach, chief economist at LPL Financial.

Why the markets are in such a bad mood right now

The new figures and bank revenues helped allay fears of a full percentage point increase from the Fed. Only 31% of investors price in an increase of 100 basis points from Friday, compared to over 80% earlier this week, according to CME Fedwatch Tool.

Tech stocks, which are particularly vulnerable to interest rate hikes, also rose on Friday. Metaplatforms (FB) and Amazon (AMZN) was up above 3.5% and Netflix (NFLX) increased over 7%.

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