US stocks opened higher on Friday and recovered some distance after the S&P 500 was close to falling into a bear market and the Chinese central bank lowered a key interest rate.
The S&P 500 rose 0.9% according to the broad market index closed 0.6 per cent. and on Thursday reached its lowest level since March 2021. The Nasdaq Composite rose 1.2%, and the Dow Jones Industrial Average rose 191 points, or 0.6%, shortly after opening time.
Shares have come under pressure this week of concerns about global growth. Investors worried about how aggressively the Federal Reserve would react to the onslaught of high inflation and Covid-19 lockdowns in China that limited economic activity and narrowed supply chains, leading to a sale.
The S&P 500 is about to shut down for the seventh week in a row. It was close to entering bear market territory in Thursday’s choppy trade, market shorthand for a 20% drop from the last high.
On Friday, the Chinese central bank unexpectedly lower a key interest rate acting as a benchmark for mortgages, a move expected to support the country’s housing market. It kept other courses unchanged.
“We have a growth scare at the moment, coming from China and monetary policy biting into the US. So this morning, the mood was helped by China’s action,” said Arun Sai, a multi-asset strategist at Pictet Asset Management. “But we still need to build more evidence to convince the markets that a soft landing is possible.”
Government bonds have largely risen this week, as they typically do well in times of economic stress. The yield on the benchmark 10-year government bond fell to 2.840% on Friday from 2.854% on Thursday, extending the fall to a third day. Prices rise when interest rates fall.
Shares of Ross Stores fell 22% following the dealer’s announcement a decline in sales and said it expects another decline this quarter. Foot Locker rose 9.4% after its CFO said he expects the company’s full-year earnings to be at the upper end of guidance.
Palo Alto Networks rose 11% after reporting quarterly revenue that beat analysts’ expectations. Another cybersecurity company
also increased by 8 per cent.
Agricultural equipment manufacturer
fell 6.3%, even though it posted higher sales and profits on strong demand. Its CEO said supply chain problems disrupted production levels and supplies.
“The earnings season has been good, there are a little more companies than usual beating expectations. The question is from the next quarter onwards, where we will have the full effect of the jump in oil prices and the war in Ukraine, ”said Kiran Ganesh, a multiasset strategist at UBS. “That’s going to be the key, this is a bit of a preview.”
Abroad, Stoxx Europe 600 added 1.4%. Asian stocks also rose, with Shanghai Composite up 1.6% and Hong Kong’s Hang Seng up 3%.
The Swiss luxury department store Cie. Financière Richemont fell 12% after missing analysts’ estimates of operating profit, cited suspension of activity in Russia.
Oil prices rose with Brent crude rising 0.3% to trade at $ 112.44 a barrel. barrel.
Write to Anna Hirtenstein at [email protected]
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