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Tech Futures rally after brutal trading week




US stock futures rose, suggesting that the markets could hold a relief rally at the end of a punitive week of losses across major indices.

Futures linked to the S&P 500 rose 1.2% on Friday, while those of the Dow Jones Industrial Average rose 0.7%. Contracts for technology-heavy Nasdaq-100 rose 1.7 percent.

Twitter TWTR -2.19%

Shares plunged 14% before the market after Tesla CEO Elon Musk tweeted that his deal to buy the social media company is “temporarily pending pending details that support calculations that spam / fake accounts actually represent less than 5% of users . ” Last month, Mr. Musk signed a $ 44 billion deal to take Twitter privately.

Movements higher in the US market followed a rally late on Thursday that helped the Nasdaq Composite win. Risk-on sentiment is carried into international stock markets overnight. On Friday morning in the US, investors were scooping up shares in dilapidated technology companies before the opening

Investors described the rise as a postponement of a market sale that has set all three major US indices in motion for their worst week since the end of January. At the end of Thursday, the Nasdaq Composite was down 6.4% this week. Dow, meanwhile, is down 3.6%, extending its losses to a seventh consecutive week ̵[ads1]1; the longest losing streak since 2001.

“This can only be a buy-the-dip rally and a dead-cat bounce than anything else,” said Greg Swenson, founder of Brigg Macadam, a London-based investment bank. Looking ahead, he said, he sees further losses for the US stock market. “Even big companies are going to suffer with the market.”

Investors are currently facing problems that have not been seen for decades, as inflation continues to soar near four decades high. Many traders are now counting on the increasing risk of a recession as the Federal Reserve tries to bring price pressure under control. Many institutional and individual investors have begun to reject the idea that the Fed can construct a so-called soft landing, where inflation falls but unemployment remains low and the economy continues to grow.

On Thursday, Fed Chairman Jerome Powell acknowledged that getting inflation under control could create a short-term blow to the economy, saying on the radio program Marketplace that “the process of getting inflation down to 2% will also include some pain.”

He reiterated his view that a further half a percentage point increase would probably be appropriate at future meetings, but said that the central bank could consider larger increases if economic data required such steps.

This week’s inflation report gave investors little consolation, especially after data showed that price pressure was largely broad-based. Even as gasoline prices fell, prices of groceries as well as restaurants, flights and other services rose, frightening investors who had hoped inflation had peaked.

This forced many to sell out more risky investments and collect assets that were perceived as safer. Growth and technology stocks in particular, which are usually hit by higher interest rates, were beaten down. But the risk-taking mood wavered elsewhere, leading to sharp falls in cryptocurrencies as well.

“This week was like a turning point in the markets. The mood has changed from assessing whether we can live in an economy with higher rates [investors] asks: ‘Are we on the brink of a recession?’ ”Said Florian Ielpo, macro manager at Lombard Odier Investment Managers.

On Friday, however, technology stocks were among those leading the rise before the market. Tesla rose 6.9%, Nvidia rose 3.6% and Netflix rose 2.4%.

Robinhood increased by 24% in the pre-market after Sam Bankman -Fried, the founder of the cryptocurrency exchange FTX, revealed that he bought a 7.6% stake in the brokerage house. Duolingo jumped 18% before opening time after the language learning platform reported a sharp jump in revenue and monthly active users.

Bitcoin climbed 6.7% to $ 30,492.75 on Friday, from the 17:00 ET level of $ 28,572.24 on Thursday. But elsewhere in the cryptocurrency markets, the besieged stablecoin TerraUSD continued to decline, trading at 11 cents at 4 am ET. A so-called stablecoin for its typical $ 1 bond, TerraUSD broke from that level last weekend after a wave of token sales. Sister token Luna has also fallen sharply this week, trading at half a penny at 04.00, down from more than $ 60 on Monday.

Traders worked on the floor of the New York Stock Exchange on Thursday.


Photo:

John Minchillo / Associated Press

In the bond market, the return on the benchmark index for 10-year US government bonds climbed to 2.911%, from 2.815% on Thursday, and reversed a four-day interest rate that came when investors piled back into bonds. Interest rates rise when bond prices fall.

The WSJ Dollar Index, which measures the dollar against a basket of other currencies, was flat and stopped after a six-day winning streak.

Overseas stock markets also traded higher on Friday. In Europe, the pan-continental Stoxx Europe 600 rose 1.4%. In Asia, Hong Kong’s Hang Seng increased 2.7%, while the Japanese Nikkei 225 jumped 2.6%. Shanghai Composite rose 1 percent.

—Caitlin Ostroff contributed to this article.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com

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