Dow suffers longest losing streak since 2001 as equity benchmarks extend weekly losses despite closing sharply higher on Friday

U.S. stocks ended sharply higher on Friday, but all three major benchmarks posted yet another week of losses as investors weighed the possibility of further declines and the Federal Reserve’s ability to rein in the inflation without bringing down the economy.

The Dow Jones Industrial Average fell for a seventh straight week, its longest losing streak since July 2001, according to Dow Jones Market Data.

How have stock indices performed?
  • The Dow Jones Industrial Average DJIA,
    +1.47%
    rose 466.36 points, or 1.5%, to close at 32,196.66.

  • The S&P 500 SPX,
    +2.39%
    climbed 93.81 points, or 2.4%, to end at 4,023.89.

  • The Nasdaq Composite COMP,
    +3.82%
    jumped 434.04 points, or 3.8%, to end at 11,805, recording its biggest daily percentage gain since Nov. 4, 2020, according to Dow Jones Market Data.

For the week, the Dow Jones fell 2.1%, the S&P 500 2.4% and the Nasdaq 2.8%. The S&P 500 fell for a sixth consecutive week, its worst losing streak since June 2011, according to Dow Jones Market Data. The Nasdaq Composite also fell for a sixth consecutive week, booking its longest losing streak since November 2012.

What drove the markets?

According to Brendan Connaughton, founder and managing partner of Catalyst Private Wealth, Friday’s stock market rebound mirrors the type of “seesaw moves” seen when markets are looking for a bottom.

“The market has been beaten,” Connaughton said by phone Friday. “It’s the start of a trough process.”

Some analysts believe stocks should at least rebound in the short term from recent losses, saying selling this week may have reached levels that signaled short-term capitulation. They warned, however, that a downtrend may still be firmly in place.

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“As we’ve seen time and time again, equities struggled to sustain any rally attempt as traders quickly took advantage of rallies amid bearish macroeconomics – rising interest rates, weak growth and high inflation. “, said Fawad Razaqzada, market analyst at City Index and Forex.com, in a note.

In an interview aired Thursday night on National Public Radio’s Marketplace program, Federal Reserve Chairman Jerome Powell warned that the central bank’s ability to tighten policy without plunging the economy into a deep recession did not depend solely on political decision-makers.

“So whether we can execute a soft landing or not, it may actually depend on factors that we don’t control,” Powell said.

Powell quibbled by suggesting that last week he dismissed the prospect of a 75 basis point rate hike, pointing out that he had said, “We weren’t actively considering that.”

Meanwhile, the S&P 500 skirted bear market territory, defined as a 20% drop from a recent high, closing Friday 16.1% off its Jan. 3 high, according to Dow Jones Market Data.

Lily: The S&P 500 is on the verge of a bear market. Here is the threshold.

But the S&P 500’s weekly loss is the first time in more than a decade that the index has seen six consecutive weeks of declines, according to a team of Deutsche Bank strategists led by Henry Hill.

“Unlike April, when equity declines were triggered by the prospect of a more aggressive Fed tightening cycle and went hand in hand with sovereign bond losses, this week’s declines have much more obviously surrounded global growth risks, which you can see in how fed funds futures are now starting to unwind some of the tightening they had predicted over the coming year,” Hill said.

The market suffered this week from higher than expected consumer prices, as well as still high producer prices.

Lily: Fed tightening is ‘heavy with volatility’ in the stock market, but this JPMorgan portfolio manager says he’s not betting on a US recession

Meanwhile, U.S. import prices cooled in April after rising sharply in the previous three months, the Labor Department said Friday. Prices for overseas goods remained unchanged after rising 2.9% in March. Economists polled by the Wall Street Journal had expected import prices to gain 0.6% in April.

In other economic data released on Friday, the University of Michigan’s consumer confidence gauge fell to 59.1 in May from a final April reading of 65.2, its lowest level in more than 10 years. . Economists expected a drawdown of 64.1.

The drop is pushing the confidence gauge “deeper into recessionary territory.” But confidence has been a poor guide to consumption growth in recent years, so we shouldn’t over-interpret this signal,” said Michael Pearce, senior U.S. economist at Capital Economics, in a note.

Some recovery in battered cryptocurrency markets on Friday may have helped overall sentiment, analysts said.

BitcoinBTC USD,
-1.21%
rose 4.8% to $29,942, marking a slight recovery after falling to around $25,400 on Thursday, the lowest level since December 2020, according to data from CoinDesk. The cryptocurrency had fallen amid a crash in some stablecoins, which are believed to be pegged to the dollar.

Lily: Why is UST, LUNA crashing? The Collapse of a Once $40 Billion Cryptocurrency, Explained

Which companies were targeted?
  • Shares of Twitter Inc. TWTR fell 9.7% after Elon Musk tweeted that the agreement to buy the social media company was “temporarily suspended”. Musk, managing director of electric vehicle maker Tesla Inc. TSLA, said the suspension of the agreement was “pending details supporting the calculation that spam/fake accounts indeed represent less than 5% of users”. In a subsequent tweet, Musk said he was “still committed to the acquisition.” Tesla shares climbed 5.7%.

  • Shares of Robinhood Markets Inc. HOOD jumped 24.9% after a late Thursday filing revealed Sam Bankman-Fried, the chief executive of cryptocurrency exchange FTX Trading, took a $7 stake. .6% in the popular trading platform.

To see: Musk’s ‘weird tweet’ is the latest reminder that retail investors watching Twitter should proceed with caution

How have other assets performed?
  • The yield of the 10-year note TMUBMUSD10Y,
    2.917%
    rose 11.7 basis points on Friday to 2.932%. Yields and debt prices move in opposite directions.

  • In CL.1 oil futures contracts,
    +3.82%,
    West Texas Intermediate crude for delivery in June CLM22,
    +3.82%
    rose 4.1% to end at $110.49 a barrel for a weekly gain of 0.7%.

  • GC00 gold futures,
    -0.78%
    fell, with gold for June delivery sitting down 0.9% at $1,808.20 an ounce. This is the lowest close for the most active contract since Feb. 4, 2022, according to Dow Jones Market Data.

  • In European equities, the Stoxx Europe 600 SXXP,
    +2.14%
    closed up 2.1% on Friday for a weekly gain of 0.8%. London’s FTSE 100 UK:UKX gained 2.6% on Friday, rising 0.4% for the week.

  • In Asia, the Shanghai Composite CN:SHCOMP ended up 1%, taking its weekly gain to 2.8%. The Hang Seng HK:HSI index jumped 2.7% on Friday and slid 0.5% for the week. The Japanese Nikkei 225 JP: NIK rose 2.6% on Friday but still posted a weekly loss of 2.1%.

–Barbara Kollmeyer contributed to this report.

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