Wall Street adds to week’s big gain; crypto falls again

Wall Street is tackling its formidable surge from the previous day in Friday morning trading a bit more, keeping it on track for a strong gain for the week.

The S&P 500 was up 0.6% a day after climbing 5.5% on its best day since spring 2020. The Dow Jones Industrial Average fell 41 points, or 0.1%, to 33 674, after jumping more than 1,200 points a day. earlier, while the Nasdaq composite was 1.2% higher, at 10:21 a.m. EST.

Markets were boosted after China eased some of its strict anti-COVID measures, which have hurt the world’s second-largest economy. Hopes of greater economic growth from China helped not only stocks but also oil prices to rise, with U.S. crude rising more than 4% to hit $90 a barrel.

Thursday’s huge rally for Wall Street came after a report showed U.S. inflation slowed more than expected last month. This has raised hopes that the worst of inflation is finally over and the Federal Reserve may take a less aggressive path to raise interest rates, although analysts and economists have warned that high inflation could remain stickier than expected on the downside. Rises at such rates can cause a recession and lower stock prices.

Just as important as the severity of current inflation is the level at which US households imagine it in the years to come. Indeed, expectations that are too high could trigger a vicious cycle in which people speed up their purchases and take other actions that only further inflame inflation.

The Fed said it was monitoring those expectations closely and that preventing such a catastrophic loop was one of the reasons it acted so aggressively on rate hikes. Inflation expectations have been relatively high recently, but not to the point of triggering panic at the Federal Reserve. A preliminary report released on Friday suggested that US households are not changing those expectations much.

The median inflation expectation for the coming year among households reached 5.1% against 5% a month earlier, according to a survey by the University of Michigan. Long-term inflation expectations, meanwhile, reached 3%. But it’s still in the same 2.9% to 3.1% range where it was for 15 of the past 16 months.

The Fed has already raised its key overnight rate to a range of 3.75% to 4%, from virtually zero in March. The likely scenario is still for it to rise further next year and then keep rates at that high level for some time.

The hope for the markets is that a slowdown in inflation could mean the Fed will keep the line lower and less painful for the markets than it otherwise would have.

Traders are now increasingly betting that the rate could reach a range of 4.75% to 5% early next year, according to CME Group. A week ago, they saw a higher ultimate rate as much more likely, with a large share expecting something like 5.25% to 5.50%.

Bond markets are closed for trading on Veterans Day. On Thursday, yields plunged as investors lowered their expectations of how aggressively the Fed will raise rates.

The S&P 500 is heading for its third weekly gain in the past four, and its 5.5% rise is on track to be the largest since June.

Meanwhile, in the crypto market, prices are falling again amid the industry’s latest crisis of confidence. One of the biggest crypto trading platforms, FTX, has filed for bankruptcy after its users began scrambling to withdraw their money out of fear of its financial strength.

The exchange and its founder are under investigation by the Justice Department and the Securities and Exchange Commission, and rivals have said that FTX’s failure could shake confidence in the entire system.

Bitcoin fell below $16,900, down 4.6% from the previous day, according to CoinDesk. It set its record close to $69,000 almost exactly a year ago, and it was above $21,000 a week ago.

This story was published from a news feed with no text edits.

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