US stocks swing higher in latest ‘corkscrew’ trading

‘Inflation spreading more widely’

NEW YORK, Oct 13, (AP): US stocks are swinging higher on Wall Street Thursday after erasing steep earlier losses caused by a worse-than-expected report on inflation, the latest set of corkscrew moves to rock financial markets.

The S&P 500 was 0.9% higher in midday trading, a neck-snapping turn after being down as much as 2.4% in the morning and touching its lowest level in nearly two years. Other markets also veered suddenly from sharp losses to gains.

Besides stocks, prices also fell sharply for bonds, cryptocurrencies and other investments immediately after the U.S. government released its report showing inflation is spreading more widely across the economy. One component that’s closely followed by policy makers and investors accelerated to its hottest level in 40 years.

That’s forcing investors to brace for continued, big hikes to interest rates by the Federal Reserve to get inflation under control, and the potential recession those moves could create. But trading remains very shaky across financial markets. The Dow Jones Industrial Average went from an early loss of 549 points to a midday gain of 381, or 1.3%, to 29,585. The Nasdaq swung from an early 3.2% loss to a 0.7% gain by 11:30 a.m. Eastern time.

Inflation data

Stocks in Europe also flipped from losses caused by the U.S. inflation data as the day progressed, while Treasury yields pulled back a little from their initial surge. They’re the latest jagged, back-and-forth moves for markets, which have been swinging sharply due to all the uncertainties about economies around the world and how badly higher interest rates will hurt them.

Most investors came into the morning already expecting the Fed to hike its key overnight interest rate by three-quarters of a percentage point next month, which would be its fourth straight hike that was triple the usual size.

But Thursday’s disappointing data means many investors now expect a fifth such increase in December, dashing hopes that the Fed may begin downshifting soon. Bets are increasing that the Fed could pull its overnight rate above 5% by early next year. It started this year at virtually zero.

Higher rates make buying a house, car or anything else purchased on credit more expensive, and the hope is that will slow the economy and job market enough to undercut inflation. But higher rates take a notoriously long time to take full effect, and the Fed risks causing a recession if it ends up going too far.

“If the Fed insists on continuing to hike until the numbers improve, they are going to over-hike,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments. “They’re swinging from doing too little to doing too much. Those two vices don’t cancel out.”

The growing expectations for an even more aggressive Fed sent Treasury yields jumping. The yield on the 10-year Treasury, which helps set rates for mortgages and many other loans, soared to 3.97% from 3.90% late Wednesday, near its highest level in more than a decade. Earlier in the day, it topped 4%.

The two-year yield, which moves more on expectations for Fed action, rose to 4.44% to from 4.29%. It crossed above 4.50% earlier in the morning.

Europe

At midday in Europe, the FTSE 100 in London gained 0.1%, the DAX in Frankfurt rose 1% and the CAC 40 in Paris added 0.5%.

Asia

In Asia, the Shanghai Composite Index lost 0.1% to 3,016.35 and the Nikkei 225 in Tokyo sank 0.6% to

US economy remains ‘resilient’, says Yellen

WASHINGTON, Oct 13, (AP): US Treasury Secretary Janet Yellen sought Wednesday to project confidence in the U.S. financial outlook while pledging vigilance in responding to “risks on the horizon.”

She is offering that message as global finance leaders gather in Washington to discuss the increasingly dismal view of the global economy.

“Our economy remains resilient in the face of global economic headwinds,” Yellen said at a meeting on the sidelines of this week’s annual meetings of the International Monetary Fund and its sister lending agency, the World Bank.

Her remarks to the Bretton Woods Committee’s International Council crediting President Joe Biden’s domestic policies for contributing to U.S. economic strength came as administration officials try to talk up the president’s policies ahead of midterm elections. Those elections will decide the balance of power in Congress and statehouses across the nation. Democrats - with no margin for error - are fighting to retain control of the House and Senate.

Russia’s invasion of Ukraine has driven up food and energy prices globally - in some places exponentially, exposing vulnerabilities in the global food and energy supply. The ongoing COVID-19 pandemic, rising inflation and worsening climate conditions are also impacting world economies and exacerbating other crises, like high debt levels held by lower-income countries.

WASHINGTON: Also:

Federal Reserve officials at their last meeting stressed their commitment to taming “unacceptably high’’ inflation before announcing that they were raising their benchmark interest rate by a substantial three-quarters of a point for a third straight time and signaling more large rate hikes ahead.

In minutes from their Sept. 20-21 meeting released Wednesday, the Fed policymakers judged that a “softening of the labor market’’ - likely including higher unemployment - would be needed to curb the nation’s intense inflationary pressures. They noted that hiring remained “robust,” which itself fuels high inflation as wages rise sharply.

26,237.42. Hong Kong’s Hang Seng tumbled 1.9% to 16,389.11, its lowest close in more than 11 years.

The Kospi in Seoul fell 1.8% to 2,162.87 while Sydney’s S&P-ASX 200 gained less than 0.1% to 6,642.60.

India’s Sensex lost 0.7% to 57,205.89. New Zealand’s benchmark lost 0.5% and Southeast Asian markets also declined.

Oil

In energy markets, benchmark U.S. crude gained 13 cents to $87.40 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oil trading, added 20 cents to $92.65 per barrel in London.

Currencies

The dollar edged back to 146.68 after hitting a 24-year high of 145.85 on Wednesday.

The dollar’s exchange rate has been rising against other currencies due to the Fed’s rate hikes and recession fears. The yen’s weakness has prompted expectations Japan’s central bank might intervene for a second time to prop up the exchange rate following an intervention in September.

The euro strengthened to 97.48 cents from 97.06 cents.