NEW YORK (AP) — U.S. markets on Friday were poised to recoup some of the losses suffered in one of its worst weeks of 2022, a volatile time rocked by anxiety over inflation, war and a pandemic that won't seem to end.
Futures for the S&P 500 rose 1.3% and the same for the Dow industrials gained 0.9%. Heading into Friday, the S&P has lost 4.7% and the Dow declined 3.6% for the week, one that's seen two more dreary government reports on inflation.
Trading has been volatile, with indexes prone to sharp swings as investors try to shield their portfolios from the impact of the highest inflation in decades.
“Nothing has materially changed in the world from yesterday, and if anything, Russia/Europe risks are increasing. The rally today looks more like a technical rebound after a torrid week, than a structural turn in sentiment. As such, it should be taken with a grain of salt,” Jeffrey Halley of Oanda said in a report.
Federal Reserve Chair Jerome Powell, fresh off winning Senate confirmation for a second four-year term, for the first time Thursday acknowledged that high inflation and weakness in other economies could thwart his efforts to avoid a recession.
Powell had earlier sought to portray the Fed’s efforts to tighten interest rates as consistent with a so-called “soft landing” for the economy.
Gains in Europe and Asia followed a mixed and muted close Thursday on Wall Street. Oil prices rose.
In Europe, Britain's FTSE 100 picked up 1.6% and Germany's DAX gained 1.4%. The CAC 40 in Paris added 1.2%.
In Asian trading, Hong Kong's Hang Seng index gained 2.7% to 19,898.77 and the Nikkei 225 in Tokyo jumped 2.6% to 26,427.65. South Korea's Kospi added 2.1% to 2,604.24 and in Sydney, the S&P/ASX 200 advanced 1.9% to 7,075.10.
The Shanghai Composite index gained 1% to 3,084.28 and India's Sensex climbed 1.4%.
Central bank moves to fight back against price increases by raising interest rates are pulling some currencies lower while the dollar rises. The Japanese yen has weakened sharply in the past several months, while the Chinese yuan, whose value against other currencies is regulated, has also weakened.
The euro, likewise, has weakened amid the fighting in Ukraine and uncertainty over supplies of Russian gas and oil. The euro was trading at $1.0385 early Friday, falling below the $1.0500 level it had hovered above for most of the week.
The dollar was at 129 yen, up from 128.42. Against the Chinese yuan, it was at 6.79 per dollar, up from about 6.41 yuan a month ago.
Even if they finish with gains Friday, U.S. indexes are on pace for sharp weekly declines, extending the market’s slump so far this year. The benchmark S&P 500 is now down 17.5% in 2022, while the Nasdaq is down 27.3%.
The Labor Department's report that wholesale prices soared 11% in April from a year earlier adds to concerns that manufacturing costs are being passed on to consumers, who might pull back on spending, crimping economic growth.
On Wednesday, Labor's report on consumer prices showed a bigger increase than expected in prices outside food and gasoline. That “core inflation” can be more predictive of future trends.
Inflation has been worsened by Russia's invasion of Ukraine and the conflict's impact on rising energy prices. China's recent lockdowns amid concerns about a COVID-19 resurgence have also worsened supply chain and production problems at the center of rising inflation.
In other trading, U.S. benchmark crude oil gained $1.65 to $107.78 per barrel in electronic trading on the New York Mercantile Exchange. It gained 42 cents to $106.13 per barrel on Thursday.
Brent crude, the pricing basis for international trading of crude, added $1.64 to $109.09 per barrel.