U.S. stock futures advanced, putting major indexes on course to extend the whipsaw moves that have injected fresh volatility into markets this week.
Futures for the S&P 500 added 0.7% Friday. Contracts for the tech-focused Nasdaq-100 added 0.9% and futures for the Dow Jones Industrial Average rose 0.5%. All three major indexes fell Thursday, closing at their lowest levels since 2020. Thursday’s decline reversed a rally in stocks Wednesday.
Stock indexes are on track to finish the week with sharp losses as investors have tried to assess inflation, central banks’ response to it and the outlook for the global economy. The Federal Reserve earlier this week approved the largest interest-rate increase since 1994 and signaled it would continue lifting rates this year at the most rapid pace in decades to fight inflation.
Recent rate increases have reversed a prior cycle of loosening monetary policy that allowed prices for both stocks and bonds to rally in recent years. Prospects for repeated rate rises throughout the rest of the year have caused investors to sell out of both assets and lent to fears that rapid tightening could dampen growth. U.S. mortgage rates recently reached their highest level in more than 13 years. Recent economic data reports have shown sharp declines in key sectors.
“The central banks, who have been our friends for a very long time, are telling us we should expect pain,” said Hani Redha, a portfolio manager at PineBridge Investments. “That inflation number is the only thing that matters right now. Even if we see growth slowing a lot, that will not be enough to cause the Fed to change course.”
Mr. Redha said it is possible that inflation could still climb further in the coming months as energy prices remain elevated. Brent crude, the international benchmark for oil prices, rose 0.5% to $120.46 a barrel.
Signs remained that investors sought assets viewed as safe to hold, such as the U.S. dollar and U.S. government bonds. The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, rose 0.5%. In bond markets, the yield on benchmark 10-year Treasurys ticked down to 3.235% from 3.303% Thursday. Yields fall as prices rise.
Overseas, the pan-continental Stoxx Europe 600 added 0.7%. Shares of commodity mining and trading giant Glencore added 2% in London trading after the company raised price and cost guidance for its coal operations and said that its trading business is outperforming expectations.
In Asia, the Bank of Japan maintained ultralow interest rates on Friday, confirming that it won’t join the Federal Reserve and other major global central banks in tightening monetary policy. Japan’s Nikkei 225 stock index fell 1.8% and the Japanese yen fell 1.6% against the dollar.
South Korea’s Kospi edged down 0.4%, while China’s Shanghai Composite added 1%.
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