U.S. stocks rose Wednesday mid-morning, shaking Tuesday’s losses as investors stayed focused on the growing signs of a slowdown in U.S. economic growth.
The S&P 500 reduced previous losses to trade higher from 10:30 am ET, reversing the course after a 2% drop in the index a day earlier. The Dow Jones Industrial Average gained more than 150 points and, although the Nasdaq Composite also rose, it outperformed the rest of the major averages as technology stocks remained under pressure.
Bitcoin fell and prices fell briefly below $ 20,000. West Texas Intermediate Crude Oil futures rose above $ 113 a barrel for the first time in two weeks, while 10-year Treasury yields fell below 3.2%.
The latest volatility attack on the markets came amid renewed concern over the impact of inflation on the growth outlook for the US economy. On Wednesday, U.S. GDP in the first quarter was revised downward to show an annual contraction of 1.6%, as personal consumption was weaker than previously reported. And a separate report earlier this week showed a drop in U.S. consumer confidence to a 16-month low and a deterioration in short-term expectations to a nine-year low, which led to the concern that consumers will curb spending in anticipation of persistent prices.
In light of these and other recent reports, some Federal Reserve officials have pointed to the risk that inflation expectations will be fixed among consumers, prompting the central bank to maintain its hawk stance for the time being.
“The fact that high gasoline and food prices remain high suggests that there is some risk that long-term inflation expectations for households and businesses will continue to rise,” the Federal Reserve chairwoman said Wednesday. of Cleveland, Loretta Mester, in statements.
He suggested he would support another 75-point interest rate hike in July if economic conditions appear similar during the Fed meeting next month, echoing the support of other officials recently for that hike. Markets are currently valuing with a probability of more than 80% that a rate hike of 75 basis points will occur in July, according to data from the CME Group.
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These expectations of a series of larger-than-usual rate hikes have continued to be a pressure point for technology stocks, especially those that are highly valued in future earnings growth prospects. The Nasdaq Composite remains firmly in a bearish market, with a 28.5% drop during the year to date, and both the information technology and communications services sectors within the S&P 500 have lagged behind the broadest index.
“Inflation fears persist and the Fed will have to act more aggressively and further raise interest rates, and that is very, very bad for technology stocks,” said Octavio Marenzi, CEO of Opimas, on Yahoo Finance Live on Tuesday. “The Fed hasn’t ended interest rate hikes on any stretch of the imagination … I don’t expect any change soon here. I think this is a bearish market that has some legs.”
NEW YORK, NEW YORK – JUNE 27: Traders work on the floor of the New York Stock Exchange (NYSE) on June 27, 2022 in New York City. The Dow Jones Industrial Average opened lower in the morning after last week’s market recovery. (Photo by Spencer Platt / Getty Images)
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Pinterest shares (PINS) rose after the company said Google and PayPal executive Bill Ready will take the place of Pinterest co-founder Ben Silbermann as CEO of the social media platform. Analysts have suggested that Ready’s experience suggests that it may further help Pinterest’s expansion plans to develop purchasing capabilities on its platform.
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Shares of Nio (NIO) fell on Wednesday morning to lengthen losses after short seller Grizzly Research issued a report claiming the electric car maker was involved in “accounting mishaps” to achieve financial goals. Nio responded with a statement saying the report “has no merit and contains numerous errors.”
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Shares of Upstart Holdings (UPST) fell sharply after Morgan Stanley downgraded shares to be underweight from Equal-Weight and lowered the company’s price target to $ 19 per share from the previous $ 88, according to Bloomberg. Morgan Stanley suggested that the consumer lending platform would be under pressure due to the cyclical nature of the business.
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Emily McCormick is a Yahoo Finance journalist. Follow her on Twitter.
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