Wall Street closes worst week since 2020 with small gain

The price of the most popular cryptocurrency had plunged more than 10 per cent to fall below $US18,000. It has since regained most of the lost ground to be trading just below $US20,000 on Monday morning AEST.

On Wednesday, the Fed hiked its key short-term interest rate by triple the usual amount for its biggest increase since 1994. It could consider another such mega-hike at its next meeting in July, but Fed Chair Jerome Powell said increases of three-quarters of a percentage point would not be common.

The Fed has also just begun allowing some of the trillions of dollars of bonds it purchased through the pandemic to roll off its balance sheet. That should put upward pressure on longer-term interest rates and is another way central banks are yanking supports earlier propped underneath markets to bolster the economy.

The Fed’s moves are happening as some discouraging signals have emerged about the economy, even if the jobs market remains solid. The latest was a report on Friday showing the nation’s industrial production was weaker last month than expected. Other disappointing data, including sagging spending at retailers and soured consumer sentiment, have raised concerns the Fed’s actions could wind up being too aggressive.

Powell will testify before Congress this upcoming week on monetary policy, and what he says is sure to guide trading. The testimony is scheduled for Wednesday and Thursday, which could mean more steep swings for Wall Street.

In the six days since a game-changing report showed US inflation is accelerating, not easing as investors had hoped, the S&P 500 has had three days where it tumbled at least 2.9 per cent . That’s happened only five other times total in the last year.

For Friday at least, trading was calm as Treasury yields eased further from their highest levels in more than a decade and a measure of nervousness on Wall Street sank.

The yield on the 10-year Treasury pulled back to 3.23 per cent from 3.30 per cent late Thursday and from a peak of nearly 3.50 per cent earlier in the week.

Higher yields have been pounding all kinds of investments this year, but the harshest pain has hit cryptocurrencies, high-growth technology stocks and others that flew the highest in the earlier, easier days of ultra-low rates.

Gains for technology stocks on Friday helped the Nasdaq lead the market. Amazon climbed 2.5 per cent , and Nvidia rose 1.8 per cent .


Other stocks hit particularly hard Thursday on worries about a possible recession and inflation overwhelming consumers also bounced back. Norwegian Cruise Line rose 10.1 per cent , and American Airlines Group gained 6.4 per cent . Both were still down more than 12 per cent for the week, though.

Stocks of smaller companies, which tend to move more with expectations for the strength of the US economy, also did better than the rest of the market. The Russell 2000 index of smaller stocks rose 15,86, or 1 per cent , to 1,665.69. But it also was still down much more for the week at 7.5 per cent than the broader market.

US markets will be closed Monday in observance of the Juneteenth holiday.


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