US Stocks Open Higher After Brutal Trading Week

US Stocks Open Higher After Brutal Trading Week

US stocks opened higher Friday after a punishing week of losses across major indexes.

The S&P 500 rose 1.1% shortly after the opening bell. The Dow Jones Industrial Average added 259 points, or 0.8%, and the Nasdaq Composite climbed 1.8%.

Twitter TWTR -10.16%

shares fell 10% after Tesla Chief Executive Elon Musk tweeted that his deal to buy the social-media company and take it private is “temporarily on hold,” pending details on the amount of fake accounts on the social-media platform. Mr. Musk later tweeted that he was committed to the acquisition, helping Twitter trim losses of more than 20% before the opening bell. Tesla shares jumped 5.9% after Mr. Musk’s tweets.

The moves higher in the broader market followed a late-session rally on Thursday that helped the Nasdaq Composite eke out a gain. Risk-on sentiment carried into international stock markets overnight. By Friday morning in the US, investors were scooping up shares of beaten-down technology companies before the opening bell

Investors described the rebound as a reprieve from a market selloff that has put all three major US indexes on pace for their worst week since late January. As of Thursday’s close, the Nasdaq Composite was down 6.4% this week. The Dow, meanwhile, is on pace to fall 3.6% and extend its losses into a seventh consecutive week—its longest losing streak since 2001.

“This might just be a buy-the-dip rally and a dead-cat bounce than anything else,” said Greg Swenson, founding partner of Brigg Macadam, a London-based investment bank. Looking ahead, he said, he sees further losses for the US stock market. “Even great companies are going to be suffering with the market.”

Investors are currently confronting issues not seen in decades as inflation continues to hover near a four-decade high. Many traders are now reckoning with the growing risk of a recession as the Federal Reserve attempts to get pricing pressures under control. Many institutional and individual investors alike have begun to discount the idea that the Fed can engineer a so-called soft landing, during which inflation falls but unemployment stays low and the economy keeps growing.

The last time inflation was this high, the Federal Reserve raised rates so much that it put the US into a recession. Will we see a repeat of that today? WSJ’s Dion Rabouin breaks down why the Fed’s next steps are crucial. Photo: Kevin Dietsch/Getty Images

On Thursday, Fed Chairman Jerome Powell acknowledged that getting inflation under control could create a short-term hit to the economy, saying on the Marketplace radio program that “the process of getting inflation down to 2% will also include some pain.”

He repeated his view that further half-percentage point increases would likely be appropriate at coming meetings, but said the central bank could consider larger increases if economic data call for such steps.

This week’s inflation report offered little solace to investors, especially after data showed that price pressures were largely broad based. Even as gasoline prices eased, prices rose for groceries as well as dining out, airline travel and other services, spooking investors who had hoped that inflation had peaked.

That forced many to sell off riskier investments and pile into assets perceived as safer. Growth and technology stocks, which are typically hurt by higher interest rates, in particular were walloped. But the risk-off sentiment rippled elsewhere, leading to sharp plunges in cryptocurrencies, too.

“This week was like a pivot in the markets. The mood has changed from evaluating if we can live in an economy with higher rates to [investors] asking: ‘Are we on the brink of a recession?’ ” said Florian Ielpo, head of macro at Lombard Odier Investment Managers.

On Friday, however, technology stocks were among those that led the rebound. Nvidia added 3.6%, PayPal advanced 3.0% and Netflix gained 2.6%.

Robinhood surged 19% after Sam Bankman-Fried, the founder of the cryptocurrency exchange FTX, disclosed he bought a 7.6% stake in the brokerage. Duolingo jumped 22% after the language-learning platform reported a sharp jump in revenue and monthly active users.

Bitcoin climbed to about $30,419 on Friday, from its 5 pm ET level of $28,572.24 on Thursday. Yet elsewhere in the cryptocurrency markets, the beleaguered stablecoin TerraUSD continued to spiral lower, trading at 11 cents. A so-called stablecoin for its typical peg to $1, TerraUSD broke from that level last weekend following a wave of selling of the token. Its sister token Luna also has fallen precipitously this week, trading at half a penny, down from more than $60 on Monday.

Traders worked on the floor of the New York Stock Exchange on Thursday.


Photo:

John Minchillo/Associated Press

In the bond market, the yield on the benchmark 10-year US Treasury note climbed to 2.906%, from 2.815% Thursday, reversing a four-day yield slide that came as investors piled back into bonds. Yields climb when bond prices decline.

The WSJ Dollar Index, which measures the greenback against a basket of other currencies, traded was up 0.1%. As of Thursday, it had traded higher for six consecutive sessions, gaining about 2.3% over the period.

Overseas stock markets also traded higher Friday. In Europe, the pan-continental Stoxx Europe 600 climbed 1.6%. In Asia, Hong Kong’s Hang Seng added 2.7%, while Japan’s Nikkei 225 jumped 2.6%. The Shanghai Composite gained 1%.

—Caitlin Ostroff contributed to this article.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com

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