U.S. stocks climbed for a second consecutive session Friday but remain on track for modest weekly declines as investors parse signs of slowing economic growth and brace for a possible recession.
Reassurances of extra stimulus from central bakers buoyed markets, which were rattled earlier this week after weak data out of Germany and China exacerbated fears of a global economic slowdown.
Many investors have rushed to cut their exposure to riskier stocks and instead sought the relative safety of U.S. government bonds, which sent the yield on the 30-year Treasury note to a record low this week.
Sentiment appeared to shift Thursday after retail sales data indicated American consumer spending had remained strong in the face of global headwinds, countering weakness in the manufacturing space.
The Dow Jones Industrial Average climbed nearly 300 points, or 1%, on Friday as U.S. Treasury yields ticked higher. Despite the rise, the blue-chip index is still on track to end the week more than 1.5% lower, while the yield on the 30-year U.S. Treasury note remains near record lows.
It has been a choppy few days for traders and investors, many of whom hoped for quiet as the summer wanes. If Friday’s move holds, the blue-chip index will have closed up or down at least 1% In all but one trading session this week.
The yield on 10-year Treasurys rose to 1.545% Friday, from 1.534% a day earlier. The 30-year note slipped below 2% again and was briefly as low as 1.979%, according to Tradeweb.
Earlier this week, so many investors piled into long-term U.S. government debt that the yield on the 10-year Treasury note briefly fell below two-year yields for the first time since 2007, an inversion that is viewed by many as a signal that a recession could be on the horizon.
The ever-shifting signals have left traders scrambling to keep up.
“The volatility makes a difficult investing environment,” said Justin Wiggs, managing director of equity trading at Stifel Nicolaus. “It seems to be equal parts people feeling they need to be in motion and people feeling paralyzed.”
Corporate news also lifted individual stocks. Shares of Nvidia , the California-based chip maker, gained 8% on unexpectedly strong sales-growth figures.
That optimism over Thursday’s retail sales data spilled over to the rest of the world. In Asia, Hong Kong’s Hang Seng gained 0.9%, while stocks in Shanghai rose 0.3% and Japan’s Nikkei edged up 0.1%.
The Stoxx Europe 600 rose 1.3%, led by gains in its technology and utilities sectors. A top official at the European Central Bank said Thursday that it will announce a package of stimulus measures at its next policy meeting in September that should exceed investors’ expectations.
In commodities, Brent crude rose 0.8%, paring earlier gains after the Organization of the Petroleum Exporting Countries downgraded its demand growth forecast for the rest of 2019.
Oil prices have been volatile in recent sessions as tensions in the Strait of Hormuz ratcheted up. This week, Gibraltar released an Iranian tanker impounded in July, opening the door for Tehran to free a British-flagged vessel it seized. Fears about a global slowdown have also pressured oil as slowing economies can lead to weaker consumption.
The Commerce Department reported Friday that U.S. housing starts fell 4% in July from the prior month, the third consecutive month of declines. However, residential building permits notched their largest increase since June 2017.
—Anna Isaac contributed to this article.
Write to Corrie Driebusch at corrie.driebusch@wsj.com and Avantika Chilkoti at Avantika.Chilkoti@wsj.com
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https://www.wsj.com/articles/global-stocks-follow-u-s-markets-higher-11565943373
2019-08-16 13:55:00Z
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