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US Stocks Drift Higher Friday 06/09 15:49
Stocks inched higher Friday to close out a listless week for Wall Street, as
investors wait for next week's slate of potentially market-moving updates.
NEW YORK (AP) -- Stocks inched higher Friday to close out a listless week
for Wall Street, as investors wait for next week's slate of potentially
market-moving updates.
The S&P 500 rose 4.93, or 0.1%, to 4,298.86 to cap its fourth straight
winning week. The Dow Jones Industrial Average added 43.17, or 0.1%, to
33,876.78, and the Nasdaq composite gained 20.62, or 0.2%, to 13,259.14.
Tesla was at the front of the market, rallying 4.1% after announcing General
Motors electric vehicles will be able to use much of its extensive charging
network beginning early next year. GM rose 1.1%.
Energy stocks fell along with the price of crude oil. Exxon Mobil slipped
0.7% and was one of the heavier weights on the market. Ski resort operator Vail
Resorts dropped 7.1% after reporting weaker results for the latest quarter than
analysts expected.
This week has been relatively quiet for markets, even with the benchmark S&P
500 index gaining enough Thursday to close 20% above its October low, entering
a new bull market. More fireworks could arrive next week when the U.S.
government releases the latest monthly updates on inflation at the consumer and
wholesale levels. The Federal Reserve will also announce its latest move on
interest rates.
So far, the economy has been able to avoid a recession even though the Fed
has jacked rates up at a furious pace for more than a year in hopes of driving
down inflation. The highest rates since 2007 have helped inflation come down
some, but it's still above everyone's comfort level.
That means the big question on Wall Street is whether inflation will come
down quickly enough for the Fed to take it easier on interest rates before high
rates force the economy into a recession. A stronger-than-expected report on
hiring last week raised hopes that the economy can slide through its troubles
without a recession, but many other areas have already begun to crack.
Besides helping to cause three-high profile U.S. banking failures since
March, high interest rates have also pushed the manufacturing industry to
shrink for months. The banking industry's turmoil has also caused banks to make
it tougher for customers to get loans, which adds more stress to the economy.
"I can't tell you precisely when this recession will come to roost, but it
feels likes it's coming," said Amanda Agati, chief investment officer of PNC
Asset Management Group. "And the market is not priced for it. I don't want to
be dramatic and say a day of reckoning is coming, but there will be a wakeup
call."
She's expecting only a modest recession, not a deeply painful one like the
downturns following the 2007-08 financial crisis and the 2020 onset of the
COVID pandemic. But she is concerned by how high the stock market has climbed,
driven in particular by just a small handful of stocks.
"This is the market thinking we're going to muddle along and then the Fed is
going to get out of the driver's seat: The Fed is going to cut rates, and we're
going to power into 2024," Agati said. "And I think that's awfully delusional."
She says rates could climb higher than Wall Street expects and stay high for
longer than investors are forecasting because inflation has remained too
stubbornly high.
The wide expectations among traders is that the Fed will hold interest rates
steady at its meeting next week. If it does, that will be the first meeting
where the Fed hasn't hiked rates in more than a year. After that, the
widespread bet is that the Fed may hike one more time in July before going on
hold or even cutting rates by the end of the year.
Elsewhere on Wall Street, Adobe rose another 3.4% to add to its 5% leap from
the day before following its announcement of a new artificial-intelligence
offering for businesses. It joined a frenzy around AI that has sent a select
group of stocks soaring, such as a 165% surge for chipmaker Nvidia so far this
year.
Proponents say AI will be the next revolution to remake the economy, while
critics say it's inflating the next bubble.
In the bond market, the yield on the 10-year Treasury rose to 3.74% from
3.72% late Thursday. It helps set rates for mortgages and other important loans.
The two-year yield, which moves more on expectations for the Fed, rose to
4.62% from 4.52%.
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