Stocks on Track to End Turbulent Week With Gains
By Joe Wallace
Major U.S. stock indexes jumped Friday to end a choppy week
during which signs of a jump in inflation rattled markets.
The S&P 500 rose 0.8% shortly after the opening bell. The
Dow Jones Industrial Average added 162 points, or 0.5%. The Nasdaq
Composite advanced 1.1%.
All three major indexes remained on track for steep weekly
losses. The S&P 500 has fallen 2.1% this week, while the Dow is
down about 1.7%. The tech-heavy Nasdaq has been the hardest hit,
losing around 3.5% for the week.
Stocks recouped some losses Thursday after sliding in response
to data showing consumer prices leapt in April, which added to
evidence from commodity markets of building inflation. Investors
worry that a surge in prices for raw materials will eat into profit
margins. A burst of consumer-price inflation could also prompt the
Federal Reserve to pare back easy-money policies that have buoyed
But several Fed officials have said this week that the central
bank has no intention to withdraw that support, helping to calm
markets. Major indexes bounced Thursday following three sessions of
declines and continued to advance to end the week. The Fed needs to
see several more months of data on jobs and inflation before
determining when to begin tightening monetary policies, Gov.
Christopher Waller said Thursday.
"The Fed has been very consistent," said Paul Donovan, chief
economist at UBS Global Wealth Management. "That is telling you
something: it is telling you [higher inflation] clearly is
Nonetheless, Mr. Donovan said he expects markets to remain jumpy
in response to higher inflation numbers in the coming months.
"There will be volatility in the near term over this: not just
volatility over inflation, but volatility over the central bank
response to that."
Retail sales were unchanged in April from a month before, the
Commerce Department said. Economists had expected a rise of 0.8%,
following a surge in spending in March, when government stimulus
checks boosted household incomes.
In corporate news, Walt Disney shares fell 4.5%. Disney said
late Thursday that its flagship streaming service added fewer users
than Wall Street had expected in its fiscal second quarter after
months of torrential growth.
While the Covid-19 streaming boom is slowing for now, other
pandemic trends appear to be stickier. DoorDash gained more than 9%
after saying revenue tripled in the first quarter, showing
sustained demand for food-delivery services even as coronavirus
vaccinations picked up.
Some of individual investors' favorite stocks were among the
rare bright spots in the market this week, continuing a string of
wild moves for meme stocks. Reddit-favorite AMC Entertainment
climbed 6.7%, extending gains after rocketing higher Thursday.
Hertz Global Holdings shares have almost doubled this week as
prospects brightened for stockholders in the company, which is set
to emerge from bankruptcy.
And this week, the government bond market didn't offer a hedge
to investors looking to shield themselves from the volatility of
the stock market. Treasury prices have fallen this week alongside
stocks, sending yields higher, on rising worries about inflation.
In the bond market, the yield on 10-year Treasury notes recently
hovered at 1.636%, from 1.576% last week. Yields fall when bond
prices rise and rising inflation chips away at the purchasing power
of the bonds' fixed payments.
Brent-crude futures, the benchmark in energy markets, rose 1% to
$67.75 a barrel. Copper futures in New York, which hit a record
Tuesday, slipped 1.1% to $4.64 a pound.
A recent surge in commodity prices has sharpened focus among
investors on companies that are likely to see profits pinched by
higher input costs.
"There is more pricing pressure and that will be harder on
certain companies," said Andrew Sheets, chief cross-asset
strategist at Morgan Stanley. Consumer-discretionary stocks in the
U.S. are most vulnerable, while banks and other financial firms are
relative beneficiaries because they have minimal raw-material
inputs, he added.
In overseas markets, the Stoxx Europe 600 edged up 0.8%.
Major Asian markets rallied. Japan's Nikkei 225 gained 2.3%,
China's Shanghai Composite Index rose 1.8% and Taiwan's Taiex added
Gunjan Banerji contributed to this article.
Write to Joe Wallace at email@example.com
(END) Dow Jones Newswires
May 14, 2021 10:04 ET (14:04 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.