US stocks rose on Tuesday as traders returned from a long weekend, and stocks recovered some losses after the worst week of the S&P 500 since March 2020.
The S&P 500 advanced 2.45% on its best day in three weeks, ending at 3,764.84 and recovering some falls after falling 5.8% last week. The Nasdaq Composite gained 2.5% to finish at 11,069.30, and the Dow added more than 643 points, or 2.2%, to end at 30,531.77 and recorded its best gain of a only day from May 4th.
Bitcoin (BTC-USD) rose again above $ 21,000 after a cryptocurrency crash briefly sent prices below $ 18,000 for the first time since December 2020 over the weekend. Treasury yields rose, with the 10-year benchmark yield rising to nearly 3.3% and U.S. crude oil prices rising 1.5% to above $ 111 a barrel.
Tuesday’s early recovery in risky assets was at least a brief respite amid weeks of strong sales. The S&P 500 plunged into its first bear market since the pandemic peaked last week, and sales rose further after the Federal Reserve triggered a 75-point rise in interest rates greater than normal and indicated that she would be willing to do so. tighten even further and at the expense of some economic growth to reduce rampant inflationary pressures.
Federal Reserve Chairman Jerome Powell will address his biannual address to Congress on Wednesday and Thursday, during which he is likely to be pressured by lawmakers on Fed actions to reduce inflation and the extent to which they can affect the economy. .
And now, concerns about the resilience of the economy have risen sharply. Several economists at major Wall Street companies lowered their growth forecasts over the past few days to reflect a higher risk of recession. A recession is usually defined as two consecutive quarters of negative GDP growth, although the final call is made by the National Bureau of Economic Research (NBER).
“The outlook is likely to be very weak growth and persistently high inflation,” Bank of America economists wrote in a note Friday. “We see about a 40% chance of a recession next year. Our worst fears in the Fed have been confirmed: they were far behind and are now playing a dangerous catch-up game.”
The story goes on
Others have been even more bearish. Deutsche Bank’s base case calls for a recession to begin in the third quarter of 2023, following a slow growth in real GDP of only 1.2% in the US in 2022, compared to the 1.8% previously observed. Goldman Sachs economists “now see the risk of recession as higher and more frontal,” chief economist Jan Hatzius said in a new note. It increased its probability of recession from 15% to 30%.
The growing risks of a formal recession in the U.S. economy also make the S&P 500 vulnerable to further declines, even after a more than 22% drop so far this year. The fall in the S&P 500 bear market since World War II has averaged 29.6% with an average duration of 11.4 months, according to Ryan Detrick of LPL Financial. However, when bearish markets coincide with recession, the S&P 500 tends to fall 34.8% on average to its low level and lasts for almost 15 months.
NEW YORK, NEW YORK – JUNE 16: Traders work on the floor of the New York Stock Exchange (NYSE) on June 16, 2022 in New York City. Shares fell sharply in the morning trading as investors reacted to the Federal Reserve’s largest rate hike since 1994. (Photo by Spencer Platt / Getty Images)
Moving
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Shares of Kellogg (K) rose after the company announced plans to split into three separate companies. The newly split companies will include a separate global snack company, a U.S. grain company and a plant-based food company.
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Shares of Tesla (TSLA) gained after CEO Elon Musk said the company’s headcount would only be reduced by up to 3.5% in the short term, or a lower percentage than ‘expected earlier. Musk confirmed that 10% of Tesla’s salaried workers will be reduced over the next three months, but that ongoing hiring would keep the reduction net at just 3-3.5% of the company’s total workforce, he said. Tuesday in Bloomberg News.
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Coinbase (COIN) shares rose more than 12% as cryptocurrency prices rebounded after reaching several-year lows. The cryptocurrency trading platform saw its shares fall nearly 80 percent during the year to the close on Friday, and the shares have been trading well below their reference price of $ 250 each since the time of Coinbase’s direct listing in April 2021.
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Emily McCormick is a Yahoo Finance journalist. Follow her on Twitter.
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