October 4, 2022

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Wall Street ticks higher as recession watch remains murky

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NEW YORK (AP) — U.S. stocks are ticking higher Monday as Wall Street keeps wrestling with whether the economy will successfully avoid a recession amid rising interest rates and high inflation.

The S&P 500 was 0.7% higher, shortly before 2 p.m. Eastern time. The Dow Jones Industrial Average was up 100 points, or 0.3%, at 33,000, and the Nasdaq composite was 0.9% higher.

Stocks started the day with bigger gains, and the S&P 500 was up as much as 1.5%, with the Nasdaq briefly up nearly 2%. But they fell back as Treasury yields continued to climb, putting downward pressure on stocks. When safe bonds are paying more in interest, investors are usually less willing to pay high prices for stocks, which are riskier.

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The yield on the 10-year Treasury jumped back above 3% to 3.03%, up from 2.95% late Friday. It’s moving toward its levels from early and mid-May, when it reached its highest point since 2018 amid expectations for the Federal Reserve to raise interest rates aggressively in order to rein in the worst inflation in decades.

Such moves will slow the economy by design, and investors are trying to guess beforehand whether the Fed will move so aggressively or so quickly that it will cause a recession.

Economists at Goldman Sachs said in a research report they still see the Fed and it chair, Jerome Powell, on course to walk the line successfully and engineer what’s called a “soft landing” for the economy. That was more encouraging than some of the warnings that dragged on markets last week, including one from JPMorgan Chase CEO Jamie Dimon, who said he’s preparing for an economic “hurricane.”

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The Associated Press

2022-06-06 14:31:35

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