Wall Street rises on Friday after some encouraging signs about US inflation, but it remains likely that closing september with its worst month of the year to date.
He S&P 500 rises 0.4% and is heading for its first streak three days of earnings per month. The Industrial Average Dow Jones rises 0.9%, and the composite Nasdaq it does so by 0.6%.
Stocks Received Broad Boost After Treasury Market Yields Eased further from its highest levels in more than a decade. Yields fell after a report showed that the measure of inflation the Federal Reserve prefers to use was slightly lower last month than economists expected.
The 10-year Treasury yield fell to 4.52% from 4.58% on Thursday. This week it reached its highest level since 2007, compared to 3.50% in May and 0.50% in 2020.
When Treasury bonds, which are considered one of the safest investments possiblethey pay higher returns, Investors are less likely to pay high prices for stocks and other riskier investments. This is one of the main reasons why the S&P 500 has fallen approximately one 4% in September, dragging what had been a huge gain for the year below 13%.
Wall Street and the new normal
Treasury yields have risen sharply as Wall Street faces a new normal in which the Federal Reserve is likely to maintain interest rates high for longer.
Friday’s economic data not only showed that inflation was a little lower than expected in August, but so was US consumer spending growth. This can be positive for inflation, because it means that no so many dollars for shopping. That, in turn, might encourage companies less to try to raise prices further.
Likewise, oil prices have jumped to their highest level in over a yearwhich is putting pressure on the economy by raising fuel costs for everyone.
Another more immediate threat to the U.S. economy could come this weekend, as the government moves closer to another possible federal shutdown. Overall, markets have weathered previous shutdowns quite well, But some crucial economic reports will be released in the coming weeks.
Source: Ambito
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