new york –
Shares have been volatile in the first session of trading on Monday since Wall Street’s massive rally hit a roadblock for the first time in six weeks.
The S&P 500 was up 0.2% in early trading. It remains close to the one-year high it hit a few weeks ago. At 9:45 a.m. ET, the Dow Jones Industrial Average was up 68 points, or 0.2 percent, to $33,795, while the Nasdaq Composite was up 0.3 percent.
Electric car maker Lucid Group rose 9.5% after announcing a deal to supply powertrain and battery systems to Aston Martin. Meanwhile, Tesla’s stock fell 0.8% as concerns about overshooting eased a bit of its rally. It’s already more than doubled so far this year.
Trading in global financial markets was mostly quiet as the fundamental question remained unanswered for investors: central banks around the world raised interest rates at a breakneck pace to curb inflation. Will the economy avoid a painful recession after being controlled?
The short-lived armed insurgency in Russia over the weekend added to the uncertainty. The Ukrainian war has already helped boost inflation around the world, but investors largely overlooked the short-lived mercenary uprising.
Oil prices were relatively stable, unlike the early years of the Ukrainian War, which quickly skyrocketed. US crude rose 0.5% to $69.52 a barrel. International standard Brent crude rose 0.3% to $74.25.
There aren’t many economic or earnings reports to help answer investors’ key questions this week. Friday’s report will show how the Federal Reserve’s recommended inflation gauge fared in May, although data on consumer and wholesale-level prices had already arrived earlier this month.
More focus will be on June’s inflation data, which will be released weeks before the Fed’s next meeting on July 25-26. Also, the next monthly employment report is due, which should arrive on Friday in two weeks.
For now, traders are mainly betting on the Fed raising rates by a quarter of a percentage point in July, according to CME Group data. The Fed, which has already raised the key overnight rate to its highest level since 2007, held off on a decision last month. More importantly, many on Wall Street expect next month’s rate hike to be the last in the cycle.
The Fed, meanwhile, has suggested it could raise rates two more times as inflation remains high even if it has eased from its peak last summer. The difference in forecasts is small, but consecutive rate hikes could mean a much bigger economic impact than the last.
High interest rates keep inflation in check by putting the brakes on the economy as a whole and increase the risk of recession if interest rates remain high for too long.
High interest rates have already caused several US banks to fail, undermining confidence in the system. Manufacturing has also contracted in recent months, and analysts say the weight of a sharp rise in interest rates leaves no idea what will happen next to the economy.
“The U.S. economy is slowing, the global economy is slowing, inflation remains extreme, and interest rates remain high,” said Clifford Bennett, chief economist at ACY Securities. “There is no bullish scenario for the stock market here.”
That’s despite the S&P 500 index rising more than 20% since mid-October. This, by one definition, means that Wall Street has moved into a “bull market”—what traders call a long-term rally in stock prices.
But last week, the S&P 500 suffered its first week of declines in six years after Fed Chairman Jerome Powell reiterated that the battle against inflation was not over yet and several central banks around the world raised interest rates. . Many critics also believe that the economy has so far managed to avoid a recession, thanks in large part to a remarkably strong job market, and that the stock market has rallied after a sharp rally so far. He said it was time to take a break.
In the bond market, the 10-year Treasury yield fell to 3.73% from 3.74% late Friday. Helps set interest rates for mortgages and other important loans.
The 2-year yield, which has been rocked by Fed expectations, is stable at 4.75%.
In the overseas stock markets, indices were mixed in Europe. Shares in Shanghai fell 1.5%, while indices in other parts of Asia moved more slowly.
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Contributed by AP Business writers Yuri Kageyama and Matt Ott.
