Nasdaq rises as yields slide, S&P 500 is flat

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Nasdaq rises as yields slide, S&P 500 is flat

The Nasdaq Composite rose on Thursday while the S&P 500 ticked upward, as bond yields slid and Wall Street continued to weigh recession risks.

The Dow Jones Industrial Average fell 87 points, or 0.3%. The S&P 500 was little changed, while the tech-heavy Nasdaq Composite jumped 0.6%.

Those moves come as the yield on the 10-year Treasury note dipped to its lowest level in roughly two weeks, or below 3.1%, as investors continued to mull over the likelihood and scale of an economic downturn. Yields move inversely to prices.

Federal Reserve Chair Jerome Powell on Thursday reiterated the central bank is “strongly committed” to bringing down inflation, as he spoke on monetary policy for a second day on Congress. He also noted that a recession is a “possibility,” a fear that has continued to weigh on Wall Street.

“Definitively, we are going into a recession. How severe that recession is yet to be seen,” said Nick Giacoumakis, president of NEIRG Wealth Management.

“It depends on so many factors that I don’t think really anybody can pinpoint whether it’s going to be a really, really deep, hard recession or it’s going to be a hard landing in a more mild recession.”

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UBS is the latest investment bank this week to raise its odds of a recession to 69%, citing lackluster data last week in housing, industrial production and capital goods.

“We are now watching out for any further negative follow-through or whether we simply hit a local peak and some growth momentum in the hard data resumes,” UBS said in a Thursday note.

Citigroup increased its odds of a recession to 50%, citing a slide in consumer demand that could make it more difficult for the Federal Reserve to achieve a soft landing.

Goldman Sachs said the probability of a downturn is “higher and more front-loaded” than it was previously. In a Monday note, the firm raised its bet of a U.S. recession to 30%, up from 15%, over the next year.

On the other hand, a top strategist at JPMorgan on Thursday said he believes the U.S. economy will dodge a recession altogether, with the stock market making back any losses in the back half of the year.

Stocks vacillated Thursday as they struggled to pull back from the lows of the bear market. Still, the major averages are set for a positive week. The Dow is up 1%, the S&P 500 gained 2% and the Nasdaq Composite increased 2.8% week to date.

On Thursday, the Labor Department said U.S. weekly jobless claims fell 2,000 to a seasonally adjusted 229,000 for the week ended June 18, though the labor market remains tight.

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