US stocks rose on Friday morning and the S&P 500 is on track to end a three-week losing streak as investors digested recent assurances from the Federal Reserve that it would remain committed to bringing inflation down.
The S&P 500 rose about 1%, setting the index up for a consecutive day of gains and its first weekly gain since late May. The Dow is up more than 250 points, or 0.9%, while the Nasdaq is up almost 1% before the opening bell. Major averages held on to gains even after closely watched consumer sentiment pressures corrected to a new record low as Americans continued to grapple with elevated inflation.
The major US stock averages traded mixed this week but ultimately trended higher as investors considered the ongoing economic impact of the Fed’s actions to cut rising stocks. Fed Chair Jerome Powell this week made his strongest admission yet that a recession is “certainly a possibility” — if not the “intended outcome” — as the central bank continued to raise interest rates this year.
“Really, investors want the chairman to understand that inflation is a significant concern and that in the long term it’s better to deal with it sooner,” Diane Jaffee, group managing director and senior portfolio manager at TCW Group, told Yahoo Finance Live on Thursday. “So I think investors are taking heart that the Fed will do whatever it takes.”
Still, Powell’s allusion to the current recessionary risks followed heightened warning signals from a number of Wall Street firms who recently upgraded their own forecasts of the likelihood of a near-term recession. Powell’s assertion that the Fed’s pledge to cut inflation was “unconditional” also suggested that the central bank would not halt rate hikes at the first sign of an economic slowdown.
Defensive stocks, seen as more resilient in downturns, gained this week, with the healthcare and utilities sectors among the biggest outperformers in the S&P 500. Cyclical sectors lagged, with energy and materials both heading for weekly losses. West Texas intermediate crude futures hovered around $106 a barrel, heading for a third straight weekly loss and first monthly loss since November.
The story goes on
Government bond yields rose above the curve to steady after renewed recession worries also caused yields to fall earlier this week. The benchmark 10-year yield is back above 3.10% after surpassing 3.31% earlier in the week.
NEW YORK, NEW YORK – JUNE 14: Traders work on the floor of the New York Stock Exchange (NYSE) on June 14, 2022 in New York City. The Dow rose in morning trade after falling over 800 points on Monday, sending the market into bearish territory on fears of a possible recession. (Photo by Spencer Platt/Getty Images)
Fedex (FDX) Shares rose after the shipping giant released full-year guidance that beat Wall Street’s estimates while meeting earnings expectations for the fiscal fourth quarter. According to Bloomberg, FedEx expects full-year adjusted earnings per share to be between $22.50 and $24.50, compared to $22.36 seen by analysts. Brie Carere, FedEx’s chief customer officer, noted on the company’s conference call Thursday that they expect business-to-consumer shipping volumes to come under pressure over the next year as consumer spending continues to “trend towards services of goods.” .
Zendesk (ZEN) The stock soared after The Wall Street Journal reported that the software company is close to a deal with a group of buyout firms including Hellman & Friedman and Permira. The private equity takeover could be finalized in the coming days as talks progress, according to the Wall Street Journal.
CarMax (KMX) Shares rose after the used-car dealership reported first-quarter results that beat expectations. Earnings per share of $1.56 on sales of $9.31 billion beat estimates for earnings per share of $1.51 on sales of $8.99 billion, according to Bloomberg data -Dollar. However, overall retail used vehicle sales fell 11% year over year, which CarMax said was due to “a decline in stimulus benefits paid in the year-ago period, widespread inflationary pressures, including challenges to vehicle affordability, and declining consumer confidence.”
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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