Wall Street closes higher but still ends week in the red

Stocks on Wall Street shook off a downbeat start and ended broadly higher Friday, though the rebound was not enough to erase their losses for the week.

The S&P 500 rose 1.1% after having been down 0.9% in the early going. The gain snapped a four-day losing streak for the benchmark index, which still posted its fourth losing week in the last five.

The Dow Jones Industrial Average rose 1%, while the tech-heavy Nasdaq gained 0.9% after a sell-off in technology stocks eased.

The latest choppy trading comes a day after the S&P 500 closed out its worst quarter since the onset of the pandemic in early 2020. Its performance in the first half of 2022 was the worst since the first six months of 1970.

The S&P 500 has been in a bear market since last month, meaning an extended decline of 20% or more from its most recent peak. It’s now down 20.2% from the peak it set at the beginning of this year.

Bond yields fell significantly. The yield on the 10-year Treasury, which helps set mortgage rates, fell to 2.89% from 2.97% Thursday. The yield on the 2-year Treasury slipped to 2.83% from 2.92%.

The market’s deep slump this year reflects investors’ anxiety over surging inflation and the possibility that higher interest rates could bring on a recession.

The S&P 500 rose 39.95 to 3,825.33. Roughly 85% of the stocks in the index finished higher.

The Dow gained 321.83 points to 31,097.26, while the Nasdaq rose 99.11 points to 11,127.85. The Russell 2000 index of smaller companies rose 19.77 points, or 1.2%, to 1,727.76.

The market’s latest gyrations precede a long holiday weekend. Financial markets in the U.S. will be closed on Monday for Independence Day.

Wall Street remains concerned about the risk of a recession as economic growth slows and the Federal Reserve aggressively hikes interest rates. The Fed is raising rates to purposefully slow economic growth to help cool inflation, but could potentially go too far and bring on a recession.

Economic data over the last few weeks has shown that inflation remains hot and the economy is slowing. The latter has raised hopes on Wall Street that the Fed will eventually ease off its aggressive push to raise rates, which have been weighing on stocks, especially pricier sectors like technology. Analysts don’t expect much of a rally for stocks until there are solid signs that inflation is cooling.

The latest economic update on Friday for the manufacturing sector shows a continued slowdown in growth in June that was sharper than economists expected. On Thursday, a report showed that a measure of inflation that is closely tracked by the Fed rose 6.3% in May from a year earlier, unchanged from its level in April.