Dow suffers longest losing streak since 2001 as stock benchmarks extend weekly losses despite closing considerably higher on Friday

US stocks closed sharply higher on Friday, but all three major benchmarks still posted another week of losses as investors assessed the extent of a further decline and the Fed’s ability to rein in inflation. without causing the economy to plummet.

The Dow Jones Industrial Average fell for the seventh straight week, its longest losing streak since July 2001, according to Dow Jones Market Data.

How did stock benchmarks perform?
  • The Dow Jones Industrial Average DJIA,
    +1.47%
    it rose 466.36 points, or 1.5%, to close at 32,196.66.

  • The S&P 500SPX,
    +2.39%
    it rose 93.81 points, or 2.4%, to finish at 4,023.89.

  • The Nasdaq Composite COMP,
    +3.82%
    it jumped 434.04 points, or 3.8%, to close at 11,805, posting its biggest daily percentage gain since Nov. 4, 2020, according to Dow Jones Market Data.

For the week, the Dow fell 2.1%, the S&P 500 fell 2.4%, and the Nasdaq fell 2.8%. The S&P 500 fell for the sixth week in a row, its worst losing streak since June 2011, according to Dow Jones Market Data. The Nasdaq Composite also fell for the sixth week in a row, posting its longest losing streak since November 2012.

What drove the markets?

Friday’s stock market bounce reflects the kind of “sawtooth movements” seen when markets look to bottom, according to Brendan Connaughton, founder and managing partner of Catalyst Private Wealth.

“The market has been hit,” Connaughton said by phone on Friday. “This is the beginning of a bottoming out process.”

Some analysts see stocks as due for at least a short-term rebound after recent losses, arguing that this week’s selling may have reached levels signaling short-term capitulation. However, they warned that a downtrend may still be firmly in place.

Mark Hulbert: The beginning of the end of the stock market correction could be near

“As we have seen time and time again, stocks have struggled to sustain any attempted recovery as traders rushed to profit amid a bearish macro slide: rising interest rates, low growth and high inflation” Fawad Razaqzada, market analyst at City Index and Forex.com, said in a note.

In an interview broadcast Thursday night on National Public Radio’s Marketplace, Federal Reserve Chairman Jerome Powell warned that the central bank’s ability to tighten policy without leading the economy into a deep recession did not depend on solely from policymakers.

“So the question of whether or not we can execute a soft landing may actually depend on factors that we don’t control,” Powell said.

Powell disputed the suggestion that last week he had ruled out the possibility of a 75 basis point rate hike, emphasizing that he had said, “We weren’t actively considering that.”

Meanwhile, the S&P 500 has skirted bear market territory, defined as a 20% drop from a recent high, closing Friday 16.1% below its Jan. 3 all-time high, according to Dow Jones Market. Data.

Read: The S&P 500 is on the verge of a bear market. Here is the threshold.

But the S&P 500’s weekly loss is the first time in more than a decade that the index has posted six straight weeks of declines, according to a team of Deutsche Bank strategists led by Henry Hill.

Unlike April, when equity declines were triggered by the prospect of a more aggressive Fed tightening cycle and went hand in hand with sovereign bond losses, this week’s declines have been much more obviously related. with global growth risks, which can be seen in the way that fed funds futures are now beginning to remove some of the tightening that they had been pricing in over the next year,” Hill said.

The market has endured higher than anticipated consumer prices this week, as well as continued high producer prices.

Read: The Fed’s tightening comes ‘fraught with volatility’ in the stock market, but this JPMorgan portfolio manager says he’s not betting on a US recession.

Meanwhile, US import prices cooled in April after a strong gain in the previous three months, the Labor Department said on Friday. Foreign product prices were unchanged after rising 2.9% in March. Economists surveyed by The Wall Street Journal had expected a 0.6% rise in import prices in April.

In other economic data released Friday, the University of Michigan consumer confidence gauge fell to 59.1 in May from a final April reading of 65.2, its lowest level in more than 10 years. Economists had expected a print of 64.1.

The drop takes the confidence indicator “further into recessionary territory. But confidence has been a poor guide to consumption growth in recent years, so we wouldn’t put much stock in that signal,” Michael Pearce, senior US economist at Capital Economics, said in a note.

Some recovery in battered crypto markets on Friday may have helped sentiment overall, analysts said.

bitcoinbtc usd,
+1.13%
rose 4.8% to $29,942, posting a slight recovery after falling to around $25,400 on Thursday, the lowest level since December 2020, according to data from CoinDesk. The cryptocurrency had fallen amid the collapse of some stablecoins, which are supposed to be pegged to the dollar.

Read: Why is UST crashing, LUNA? Collapse of a $40 Billion Cryptocurrency, Explained

Which companies were in focus?
  • Shares of Twitter Inc. TWTR fell 9.7% after Elon Musk tweeted that the deal to buy the social media company was “temporarily on hold.” Musk, CEO of electric vehicle maker Tesla Inc. TSLA, said suspension of the deal is “pending details supporting the estimate that fake/spam accounts account for less than 5% of users.” In a subsequent tweet, Musk said that he was “still committed to the acquisition.” Tesla shares rose 5.7%.

  • Shares of Robinhood Markets Inc. HOOD jumped 24.9% after a Thursday night filing revealed that Sam Bankman-Fried, CEO of cryptocurrency exchange FTX Trading, had taken a 7.6% stake in the popular trading platform.

Watch: Musk’s ‘strange tweet’ is the latest reminder that retail investors watching Twitter should proceed with caution.

How did other assets fare?
  • The yield on the 10-year note TMUBMUSD10Y,
    2,932%
    it rose 11.7 basis points on Friday to 2.932%. Yields and debt prices move in opposite directions.

  • In CL.1 oil futures,
    -0.28%,
    West Texas Intermediate Crude for delivery in June CLM22,
    -0.28%
    it rose 4.1% to finish at $110.49 a barrel with a weekly gain of 0.7%.

  • GC00 Gold Futures,
    +0.12%
    fell, with gold for June delivery closing 0.9% lower at $1,808.20 an ounce. That’s the lowest close for the most active contract since Feb. 4, 2022, according to Dow Jones Market Data.

  • In European equities, the Stoxx Europe 600 SXXP,
    +2.14%
    closed 2.1% higher on Friday for a weekly gain of 0.8%. London’s FTSE 100 UK:UKX gained 2.6% on Friday, rising 0.4% for the week.

  • In Asia, the Shanghai Composite CN:SHCOMP finished 1% higher, taking its weekly gain to 2.8%. The Hang Seng HK:HSI index jumped 2.7% on Friday and fell 0.5% for the week. Japan’s Nikkei 225 JP: NIK rose 2.6% on Friday, but posted a 2.1% weekly loss.

–Barbara Kollmeyer contributed to this report.

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