Business

Future tech rally after brutal trading week


U.S. stock futures rose, suggesting the market could mount a rally at the end of a week of penal losses across the major indexes.

Futures tied to the S&P 500 index rose 1.4% on Friday, while the Dow Jones Industrial Average gained 1%. Contracts for the tech-heavy Nasdaq-100 rose 2%.

Twitter

TWTR -2.19%

stock fell 12% before the market after

Tesla

managing director

Elon Musk

tweeted that his deal to buy the social media company and make it private is “temporarily on hold”, pending details on the number of fake accounts on social media platforms. Mr. Musk later tweeted that they had committed to an acquisition, helping Twitter stop loss more than 20% before the opening bell. Tesla shares rose 6.8% following Musk’s tweet.

Higher moves in broader market follow a late-session rally on Thursday that helped the Nasdaq Composite rallied. Risk-on sentiment shifted to international stock markets overnight. On Friday morning in the US, investors are buying shares of beaten-up tech companies before the doorbell rings.

Investors describe the bounce as a bounce from a market sell-off that sent all three major US indexes into their worst weekday span since late January. At the end of Thursday, the Nasdaq Composite was down 6.4% this week. Meanwhile, the Dow was on track to drop 3.6% and extend its losses into a seventh straight week – its longest losing streak since 2001.

“This could be just a buy-bear rally and a dead cat bounce,” said Greg Swenson, founding partner of Brigg Macadam, a London-based investment bank. He said, in the future, he sees the US stock market will lose more. “Even the great companies will suffer in the market.”

Investors are now facing problems not seen in decades as inflation continues to hover near a four-decade high. Many traders are now counting on the growing risk of a recession as the Federal Reserve tries to control price pressures. Many institutional and individual investors have also begun to oppose the idea that the Fed could create a so-called soft landing, in which inflation falls but unemployment remains low and the economy continues to grow. develop.

The last time inflation was this high, the Federal Reserve raised interest rates so much that the US fell into a recession. Will we see that repeat today? WSJ’s Dion Rabouin analyzes why the Fed’s next steps are so important. Photo: Kevin Dietsch / Getty Images

On Thursday, Fed Chairman Jerome Powell

admit that controlling inflation could provide a short-term boost to the economy, saying on the Marketplace radio show that “the process of bringing inflation down to 2% will also involve some pain.”

He reiterated his view that a further half a percentage point increase might be appropriate at upcoming meetings, but said the central bank could consider larger increases if economic data calls for it. call such steps.

This week’s inflation report offers little comfort to investors, especially after the data showed Price pressure is mainly based on a wide range. Even as gas prices have fallen, prices for groceries as well as dining, air travel and other services have increased, leading investors to hope that inflation has peaked.

That forced many to sell off riskier investments and into assets perceived as safer. Growth and technology stocks, which are often hit by higher interest rates, were particularly under pressure. But the risk-taking mentality emerges elsewhere, leading to a sharp drop in cryptocurrenciestoo.

“This week is like a roundabout in the market. The mood has changed from judging whether we can live in an economy with higher rates to [investors] asked: ‘Are we on the verge of a recession?’ “Florian Ielpo, head of macro at Lombard Odier Investment Managers, said.

On Friday, however, technology stocks were among the money market leaders recovering.

Nvidia

add 4.1%,

PayPal

raise 3.8% and

Netflix

up 2.7%.

Robin Hood hero

money markets surged 22% after Sam Bankman-Fried, founder of crypto exchange FTX, revealed that he bought a 7.6% stake in the brokerage firm.

Duolingo

jumped 17% before the doorbell opened after the language learning platform reported a spike in revenue and monthly active users.

Bitcoin rallied 7.3% to around $30,650 on Friday, from a 5 p.m. ET of $28,572.24 on Thursday. Elsewhere in the crypto market, however, the alleged stablecoin TerraUSD continues to dip lower, trading at 11 cents. A so-called stablecoin with its typical peg of $1, TerraUSD broke from that level last weekend after a wave of token sales. Its sister token Luna has also plummeted this week, trading at half a cent, down from more than $60 on Monday.

Traders worked on the floor of the New York Stock Exchange on Thursday.


Photo:

John Minchillo / Associated Press

In the bond market, the yield on the benchmark 10-year U.S. Treasury note rose to 2.919%, from 2.815% on Thursday, reversing a four-day yield slide that occurred as investors poured bond back bucket. Yields increase when bond prices fall.

The WSJ Dollar Index, which measures the greenback against a basket of other currencies, traded almost unchanged. As of Thursday, it was trading higher for six straight sessions, up about 2.3% year-on-year.

Foreign stock markets also traded higher on Friday. In Europe, the continent-wide Stoxx Europe 600 rose 1.6 percent. In Asia, Hong Kong’s Hang Seng rose 2.7%, while Japan’s Nikkei 225 gained 2.6%. The Shanghai Composite rose 1%.

—Caitlin Ostroff contributed to this article.

Write to Caitlin McCabe at [email protected]

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