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Equities on Track to Snap Weekly Losing Streak


  • US stocks rose Friday, with the S&P 500 set to snap a weekly losing streak. 
  • Bond yields have been coming down this week, easing some pain for equities.
  • Wall Street’s indexes may rise after three losing weeks. 

US stocks stepped higher Friday and were on track to snap a run of weekly losses, finding some relief from a pullback in bond yields as investors assessed mounting warnings about a pending


recession

Wall Street’s big benchmarks were on course for their first weekly win after three weeks in the red. The Nasdaq Composite looked poised for the biggest advance of at least 5%. Friday’s individual stock gainers included FedEx, up after the package delivery company forecast an increase in full-year adjusted earnings. 

Investors spent the holiday-shortened week assessing a slew of warnings about recession risks. Among them, Goldman Sachs said the risk of the US falling into a recession within a year has doubled following the Fed’s aggressive rate-hike campaign and former NY Fed President Bill Dudley wrote a  recession is “inevitable” within the next 12 to 18 months.” 

Fed Chairman Jerome Powell told lawmakers this week the central bank is committed to cooling down inflation to its 2% goal range, but a decline in bond yields this week suggested investors appeared to be pricing in expectations that signs of slower economic growth will prompted the Fed to reduce the size and the speed of rate hikes. 

“Drops have been particularly large for shorter- and intermediate-term yields that may be more sensitive to monetary policy,” said Tradeweb in a note Friday. The 2-year yield at around 3.012% on Thursday represented a drop of 42 basis points over the past week from 3.435%, and the 5-year yield has fallen by more than 46 basis points to 3.134%.

Here’s where US indexes stood at 9:30 a.m. on Friday: 

St. Louis Fed President James Bullard said Friday during a UBS panel discussion in Zurich  the central bank should front-load interest rates hikes to bring down inflation sooner than later. He foresees the central bank raising the fed funds rate to 3.5% in 2022. The key range currently stands at a range of 1.5% to 1.75% after starting the year at 0% to 0.25%.

Oil prices rose. West Texas Intermediate crude tacked on 2% at $106.24  per barrel. Brent crude, the international benchmark, rose 1.4% to $108.12. 

Gold slipped 0.1% to $1,827.30 per ounce. The 10-year yield rose 3 basis points to 3.1%. 

Bitcoin headed higher by 1.9% to $21,201.64.



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