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Business

Stocks Open Mixed, Oil Falls on Growth Concerns

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U.S. stock indexes were mixed shortly after the opening bell, continuing a volatile stretch for global markets.

The S&P 500 slid 0.3% Tuesday, a day after the benchmark stocks gauge skidded  1.2%. The Dow Jones Industrial Average added 0.2%. The technology-focused Nasdaq Composite fell 0.6%.

Oil prices and bond yields fell, dragged lower by worries that major economies are headed toward a recession. Brent-crude futures, the benchmark in international energy markets, fell 4.9% to $102.26 a barrel a barrel.

In the bond market, the yield on 10-year Treasurys slipped to 2.906% from 2.990% Monday. Yields, which move inversely to prices, have drifted lower since late June on expectations that an economic slowdown would prod the Federal Reserve to pull interest rates back down in 2023.

For now, though, the Fed is intent on pushing rates up in an attempt to tame decades-high inflation. Investors say that campaign, coupled with signs that the U.S. economy is losing momentum, could spell more pain for markets after a rough first half of the year. Adding to the challenges for money managers are China’s struggle to contain Covid-19 and the war in Ukraine.

“There is going to be a recession, but we’re not there yet,” said Philip Saunders, co-head of multiasset growth at

Ninety One,

an asset manager based in the U.K. and South Africa. “The key thing that is going on is that financial liquidity is retracting.”

A look at the markets shows asset managers are moving money around in ways that suggest they see a recession coming. WSJ’s Dion Rabouin explains what to look for and why they tell us investors are increasingly pricing in a recession. Illustration: David Fang

Meanwhile, data from the National Federation of Independent Business showed confidence among small-business owners fell to its lowest level in almost a decade in June.

Among individual stocks,

PepsiCo

rose 0.1% after the drinks company said second-quarter profits and revenue beat analysts’ forecasts.

Earnings season among major U.S. companies will pick up speed later in the week with results due from major financial institutions. Investors will pay particular attention to comments by bank executives on the trajectory of the economy, and to the effects of higher input costs on profit margins.

Elsewhere in commodities, copper forwards on the London Metal Exchange fell 2.6% to just over $7,400 a metric ton. The industrial metal, a barometer for the world economy because of its use in construction and heavy industry, has slumped by over a fifth over the past month and is more than 30% below the all-time high of over $10,000 a metric ton recorded in March.

One factor that has weighed on commodities in recent weeks has been a stronger dollar. The greenback’s rally stalled Tuesday, pushing the WSJ Dollar Index down 0.1%. On Monday it rose 1.1%, lifting the dollar to its highest level against a basket of other currencies since 2002.

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



Photo:

Michael M. Santiago/Getty Images

International stocks retreated. The Stoxx Europe 600 lost 0.1%. China’s Shanghai Composite Index lost 1%, Hong Kong’s Hang Seng fell 1.3% and Japan’s Nikkei 225 dropped 1.8%.

-Gunjan Banerji contributed to this article.

Write to Joe Wallace at joe.wallace@wsj.com.

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Business

U.S. Stocks Fall Ahead of Inflation Data, Earnings Season

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U.S. stocks fell to start the week as investors prepare for fresh inflation data and corporate earnings that could influence the Federal Reserve’s path ahead for interest-rate increases.

The S&P 500 fell about 1% as the broad-market index started the week off on a negative note. The Nasdaq Composite Index shed 1.9% as technology stocks lost ground. The Dow Jones Industrial Average was 0.4% lower. 

Stocks staged a recovery in recent days, with the S&P 500 rising nearly 2% last week. The rally cooled on Friday after a stronger-than-expected jobs report showed the labor market is still hot, raising the probability that the Federal Reserve could continue with aggressive interest rate increases and potentially cause a recession. The next key data release, the U.S. consumer-price index for June, is on Wednesday.

“It’ll be interesting to see how the market trades following that news,” said

Charlie Ripley,

senior investment strategist for Allianz Investment. “It doesn’t appear like we’re going to have a decline in inflation any time soon.”

Investors are also awaiting corporate earnings reports for indications of how much higher prices and weaker consumer sentiment have eroded companies’ profits. Americans expect lower inflation increases over the longer run, a new Federal Reserve Bank of New York report said. 

“We’re in a backdrop where central banks are going to continue raising interest rates and the underlying market narrative continues to be one of potentially rising recession risks. We’re going to see markets react to different data points, react to earnings,” said

Laura Cooper,

a macro strategist at BlackRock. “That sets us up for quite a volatile period ahead.” 

“We’re cautious on equities, we’re not advocating for ‘buy the dip’ at this current juncture,” Ms. Cooper said.

Major financial firms including JPMorgan Chase and Morgan Stanley are scheduled to report earnings on Thursday, followed by BlackRock, Citigroup and Wells Fargo on Friday. KBW Nasdaq Bank Index was down about 1% in recent trading.  

Many household-name firms are also set to post earnings this week, including PepsiCo on Tuesday and

Delta Air Lines

on Wednesday. 

“These are going to be huge bellwethers on consumer confidence, on spending. The guidance will be really important, these guys have incredible insight about how the consumer is behaving and how they expect this to evolve over the rest of the year,” said

Fahad Kamal,

chief investment officer at Kleinwort Hambros. 

Twitter

TWTR -9.26%

fell 8%.

Elon Musk

filed a statement on Friday evening, saying he was terminating his $44-billion bid for the social-media company, saying it had violated the merger agreement. Twitter also put out a statement indicating it will sue Mr. Musk.  

A look at the markets shows asset managers are moving money around in ways that suggest they see a recession coming. WSJ’s Dion Rabouin explains what to look for and why they tell us investors are increasingly pricing in a recession. Illustration: David Fang

Other tech stocks fell, with

Facebook

parent Meta Platforms recently down 4.4% and

Netflix

lost 3.7%. Shares of

Broadcom

were down 3.2% after after the microchip company announced the departure of its president.

Bond markets continued to flash a key warning sign. The U.S. yield curve remained inverted, with yields on shorter-dated bonds above those of longer-dated debt. The yield on the benchmark 10-year Treasury note edged down to 2.994% from 3.098% on Friday. The two-year Treasury yield was at 3.035%.

Oil prices extended their decline. Brent, the global benchmark for crude, retreated 1.5% to trade at $102.86. It fell more than 4% last week.

It is about “the concern that we are going to see a sharp decline in demand on the back of the deteriorating growth backdrop,” Ms. Cooper said. “That’s notably playing out in the commodity space.”

Cryptocurrencies also came under more pressure. Bitcoin traded around $20,500, a 6% drop from its level at 5 p.m. ET on Friday. Ether tumbled 8%. 

Overseas, the pan-continental Stoxx Europe 600 slid 0.4%, while the euro continued to trade near parity with the U.S. dollar. The Nord Stream pipeline which transports Russian gas to Germany and other Western European countries shut for planned maintenance starting Monday.

Uniper

fell 16%, extending last week’s 30% plunge. The utility has asked for a bailout from the German government, saying it has been hit by dwindling gas supplies.

JPMorgan Chase and Morgan Stanley will report earnings later this week.



Photo:

BRENDAN MCDERMID/REUTERS

In Asia, most major benchmarks declined. Chinese stocks dropped after Shanghai reported its first local case of the BA.5 Omicron subvariant on Sunday, and the country recorded more than 2,300 locally transmitted Covid-19 cases nationwide over the last seven days. The Shanghai Composite Index slipped 1.3% and Hong Kong’s Hang Seng Index fell 2.8%. 

Officials in Macau set a weeklong shutdown of casinos and other businesses to combat the surge in cases. Gambling stocks tumbled, with

Sands China

sliding 8.2%,

Wynn Macau

shedding 6.7% and

Galaxy Entertainment Group

down 4.9%.

Over the weekend, Beijing fined some of the country’s largest internet companies for failing to make proper antitrust declarations, weighing on tech stocks.

Alibaba,

Tencent Holdings and Ping An Healthcare & Technology, which were named in the latest executive punishment notices, fell 5.8%, 2.9% and 3.4%, respectively. 

In Japan, the Nikkei 225 index rose 1.1% on Monday after current Prime Minister Fumio Kishida’s ruling coalition won the majority of parliamentary seats in an election on Sunday. The Japanese yen dropped to a fresh 24-year low of more than 137 against the dollar.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com, Rebecca Feng at rebecca.feng@wsj.com and Pia Singh at Pia.Singh@wsj.com

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Corrections & Amplifications
Beijing fined tech companies for failing to make proper antitrust declarations over the weekend. An earlier version of this article incorrectly said it happened on Monday. Also, China recorded more than 2,300 locally transmitted Covid-19 cases nationwide over the last seven days. An earlier version of this article incorrectly said the country reported 3,300 locally transmitted cases nationwide over the weekend. (Corrected on July 11)

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Business

U.S. Stocks Dip as Jobs Growth Remains Strong

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U.S. stocks lost ground after the monthly jobs report beat expectations, heading toward strong weekly gains.

The S&P 500 was down 0.3% in recent trading, a day after the benchmark index jumped 1.5% to log a fourth consecutive gain, its longest winning streak since March. The Dow Jones Industrial Average dropped 0.1%. The tech-focused Nasdaq Composite lost 0.5%.  

The June jobs report showed that rising interest rates and high inflation are so far not affecting hiring, which remains strong. The U.S. economy added 372,000 jobs in June, well above the 250,000 expected by economists surveyed by The Wall Street Journal.

Some analysts said that the strong jobs report increased chances that the Fed would proceed with a 0.75-percentage-point increase at its next meeting. The Fed in June raised interest rates by that much, marking its largest interest-rate increase since 1994.

“It gives the Fed a little bit more confidence that it can move aggressively without severely hurting the labor market,” said

Mona Mahajan,

senior investment strategist at Edward Jones. 

However, Ms. Mahajan said that historically, such aggressive interest-rate hikes eventually dent the economy.

“At some point they will hit the real economy,” she said.

For the most part, investors have lately gotten a respite from the heavy selling across markets that has dominated for much of the year. The S&P 500 has risen 1.7% this week, while the Dow has added about 0.8%. The tech-heavy Nasdaq has jumped 3.9%.

Throughout the week, many investors returned to a familiar trade: Buying shares of tech companies. The S&P 500’s technology and communication services groups have been among the biggest winners. The

ARK Innovation ETF

has soared almost 16% this week.

Some weak economic figures in recent weeks have led investors to question how aggressively the Fed will raise interest rates to fight inflation down the road. Lately, data have shown a drop in activity in industries ranging from manufacturing to home construction, accelerating worries among traders that the economy is headed for a recession. 

Of course, the latest jobs figures show that the labor market remains strong, providing solace to some investors that fears of a recession may be overblown and yet another conflicting signal about the path of the economy.

This week, U.S. central bankers reaffirmed their commitment to fighting inflation, first in minutes from the Fed’s June meeting, and then again on Thursday when two Fed officials signaled support for another 0.75-percentage-point interest-rate increase later this month. Both also indicated that recession fears may be overblown. 

“I think there has been this relief that central banks, particularly the Federal Reserve, will get a handle on inflation,” said

Susannah Streeter,

senior investment and markets analyst at Hargreaves Lansdown.

Amid a record hiring streak in the U.S., economists are watching for signs of a possible wave turn. WSJ’s Anna Hirtenstein looks at how rising interest rates, high inflation, market selloffs and recession risks challenge the growth of America’s workforce. Photo: Olivier Douliery/AFP

In corporate news,

Twitter

fell 3.9% after it said Thursday it would lay off 30% of its talent-acquisition team.

GameStop

sank 3.4% after the retailer also said it was cutting staff and terminated its finance chief.

U.S. stocks on Thursday posted their fourth consecutive session of gains.



Photo:

Michael Nagle/Bloomberg News

Still, many expect the release of inflation data and the start of second-quarter earnings season next week to bring more choppiness.

Fears of a recession on the horizon have rippled through stock, bond and metals markets lately. Economists surveyed by The Wall Street Journal have dramatically raised the probability of a recession recently and the prospect of one has sent copper prices sharply lower while spurring a rare inversion in the bond market.

A closely watched recession predictor, the yield curve, remained inverted Friday, with the yield on two-year government bonds trading higher than the 10-year equivalent. The yield on the benchmark 10-year Treasury note rose after the monthly jobs report to trade at 3.095%, up from 3.007% Thursday. 

The yield on two-year government bonds traded at 3.113%, up from 3.039% in the previous session. Yields fall when bond prices rise. 

Elsewhere in markets, Brent crude, the international benchmark for oil prices, ticked up. Earlier this week, oil prices plunged. Brent most recently gained 0.3% to $104.88 a barrel.

The dollar climbed, with The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, up 0.2%. The euro fell 0.2% to trade around $1.0147, putting the common currency within striking distance of parity, or equal value with the dollar.

Overseas, the pan-continental Stoxx Europe 600 edged up 0.5%, finishing the week up 2.5%. In Asia, trading was mixed. Hong Kong’s Hang Seng rose 0.4%, while the Shanghai Composite fell 0.2%. In Japan, the Nikkei 225 finished up 0.1%, paring earlier gains following news that former Prime Minister

Shinzo Abe

was shot during a speech. Mr. Abe later died.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Gunjan Banerji at gunjan.banerji@wsj.com

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Business

Stocks Open Higher Ahead of Powell Testimony

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U.S. stocks advanced ahead of a second day of testimony from Federal Reserve Chairman

Jerome Powell

after he warned that rapidly rising interest rates threatened a recession. 

The S&P 500 added 0.4% in early trading Thursday. The technology-heavy Nasdaq Composite Index rose 0.4% while the blue-chip Dow Jones Industrial Average also edged up 0.4%. 

Investors have mostly shed riskier assets in recent days, prompted by growing concerns that efforts by the Federal Reserve to bring inflation under control will take a toll on the economy. Investors are growing less optimistic that the Fed can engineer a so-called soft landing, whereby interest rates rise to curb inflation without pushing the economy into a recession. 

Mr. Powell acknowledged those risks in testimony to lawmakers Wednesday, saying that a recession was possible and that a soft landing for the economy would be “very challenging.” Mr. Powell is set to continue that testimony Thursday in front of a second group of lawmakers. 

Federal Reserve Chairman Jerome Powell said that interest rates would continue to rise until the central bank sees clear proof that inflation is slowing, but conceded that elevated rates could lead to a recession. Photo: Elizabeth Frants/Reuters

The S&P 500 closed down 0.1% Wednesday following Mr. Powell’s remarks, while the Dow Jones Industrial Average lost 0.2%. 

“Markets are in a real state of flux right now,” said Stephen Innes, managing partner at SPI Asset Management. “I don’t think the market is moving into bullish territory by any means.”

Large technology companies were leading gains premarket, with

Nvidia,

Snap

and

Amazon

each up around 0.9%.

The Labor Department said 229,000 Americans applied for unemployment benefits last week. Jobless claims—one of the earliest indicators of weakness in the labor market—remain at historically low levels. A gauge of activity in the manufacturing and service sectors is due shortly after the opening bell. 

In bond markets, Treasury yields declined for a second day though remained close to their highest level in more than a decade. The yield on the benchmark 10-year U.S. Treasury note fell to 3.099% from 3.155% on Wednesday. Bond yields fall as prices rise.

The U.S. dollar firmed, with the WSJ Dollar Index, which measures the currency against a basket of its peers, rising 0.1%.

In Europe, the pan-continental Stoxx Europe 600 was flat. Business surveys released Thursday showed Europe’s economy slowed sharply in June as soaring consumer prices undercut demand for a range of goods and services. 

“Inflation is at the center of all this, but there is also fading growth, and interest rates are going up. All of that together is a horrible cocktail and you just need to step aside and wait for that to work itself out,” said Hani Redha, a portfolio manager at PineBridge Investments.

A trader at the New York Stock Exchange on Wednesday.



Photo:

BRENDAN MCDERMID/REUTERS

European gas prices jumped after Germany took a step closer to rationing gas by triggering the second step of an emergency plan to deal with curtailed Russian supplies. The region’s gas prices gained more than 5% to €134.25 a megawatt hour, their highest level since March. 

Bitcoin rose 3.9% from its 5 p.m. ET level on Wednesday to $20,668.90. The cryptocurrency has steadied in recent days after a sharp selloff earlier in the month.

In commodity markets, oil prices wavered after sharp losses Wednesday. Brent crude, the international oil benchmark, weakened 0.5% to $108.16 a barrel. Other commodities whose demand is closely correlated to the economy also slipped. Copper prices in London fell 2.6% to $8,555.50 a metric ton.

Soaring energy prices have been a key contributor to the multidecade high inflation currently roiling global economies. Concern that a recession would see demand for oil fade was prompting investors to sell the commodity, said Mr. Redha. 

“I have said for a while there will be no bottom in equities without also a sustainable top in oil prices and bond yields,” he said. “I think that is potentially under way.”

In Asia, stock markets mostly rose. In Hong Kong, the Hang Seng Index rose 1.3% while in mainland China the Shanghai Composite Index rose 1.6%. In Japan, the Nikkei 225 added 0.1%.

Write to Will Horner at william.horner@wsj.com

Navigating the Bear Market

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Business

Stock Futures, Oil Drop After Rally

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U.S. stock futures fell, oil prices dropped and bond yields ticked lower after major indexes rallied to start the trading week, with recent volatility in markets showing few signs of abating.

Futures for the S&P 500 declined 1.4% Wednesday. Contracts for the tech-focused Nasdaq-100 contracted 1.6% and futures for the Dow Jones Industrial Average receded 1.2%. U.S. stocks rallied Tuesday off their worst week since March 2020, offering investors a reprieve from a recent stretch of whipsaw trading that had sent stocks and cryptocurrencies falling.

Stocks have seen sharp moves in recent weeks following aggressive interest-rate increases from the Federal Reserve, with more expected, as central banking officials seek to put a cap on inflation. Investors have scrambled to unload riskier assets amid growing fears that quick tightening of financial conditions will plunge the U.S. economy into a recession. The S&P 500 is on track for its worst first half of the year in decades, according to Deutsche Bank research analysts. 

Recession fears weighed on shares of energy, autos and travel companies in premarket and European trading.

Occidental Petroleum

declined 4.1% premarket, while

Halliburton

shares fell 3.9%.

United Airlines Holdings

fell 3.3%.

The

Cboe

Volatility Index—Wall Street’s so-called fear gauge, also known as the VIX—rose 3.6% to 31.29.

Investors sought assets viewed as safer to hold Wednesday, such as the U.S. dollar and U.S. government debt. The WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, added 0.2%. 

In bond markets, the yield on the benchmark 10-year Treasury note ticked down to 3.228% from 3.304% Tuesday. Yields fall when prices rise. 

“There is certainly an anxiousness in markets and that’s playing through in volatility,” said

Edward Park,

chief investment officer at U.K. investment firm Brooks Macdonald, adding that investors are likely awaiting fresh inflation data or a central bank meeting to assess their future trades.

Fed Chairman

Jerome Powell

is set to testify before Congress on both Wednesday and Thursday. Investors will be watching his words for clues about the future path of monetary policy.

In energy markets, Brent crude, the international benchmark for oil prices, dropped 4.4% to $109.63 a barrel. President Biden is planning to call for a temporary suspension of the federal gasoline tax, The Wall Street Journal reported. Energy prices remain near historically high levels as Russia’s invasion of Ukraine has caused Western nations to move rapidly away from Moscow’s supplies. 

“This is a reminder for markets that governments are unlikely to sit back and take a higher oil prices,” Mr. Park said. 

The dollar value of bitcoin, the world’s largest cryptocurrency by market value, edged down 2.1% from its 5 p.m. ET level Tuesday to trade at $20,393.06, according to CoinDesk. Cryptocurrencies have fallen recently amid broad investor desire to get out of speculative assets and concerns about the future of some crypto companies. 

U.S. stocks rallied Tuesday off their worst week since March 2020.



Photo:

Seth Wenig/Associated Press

Overseas, the pan-continental Stoxx Europe 600 declined 1.6%, with losses led by the basic resources, oil-and-gas and autos sectors. 

In Asia, major indexes closed with losses. South Korea’s Kospi declined 2.7%, China’s Shanghai Composite fell 1.2% and Japan’s Nikkei 225 edged down 0.4%.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

Navigating the Bear Market

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Business

Stock Market Jumps After S&P 500’s Worst Week in Two Years

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U.S. stocks rallied Tuesday off their worst week since March 2020, offering investors a reprieve from a recent stretch of whipsaw trading that had sent stocks and cryptocurrencies falling.

The S&P 500 gained 89.95 points, or 2.4%, to 3764.79. The Dow Jones Industrial Average added 641.47, or 2.1%, to 30530.25. The Nasdaq Composite Index jumped 270.95 points, or 2.5%, to 11069.30. The U.S. stock market was closed Monday for the Juneteenth federal holiday. 

Bitcoin rose alongside other cryptocurrencies, continuing to claw back some losses after a bruising weekend. Bitcoin rose to $20,836.15, up 1.9% from its 5 p.m. ET value Monday, and about 18% higher from a recent low of $17,601.58 reached Saturday, according to CoinDesk data.

Investors’ appetite for riskier assets on Tuesday follows a tumultuous week in the markets, sparked by the Federal Reserve’s approval of a 0.75-percentage-point interest-rate increase, the largest since 1994. Investors scrambled to unload riskier assets amid growing fears that central bankers will plunge the U.S. economy into a recession. The benchmark S&P 500 finished the week 5.8% lower, its largest one-week decline in more than two years.

Meanwhile, investors await further commentary from Federal Reserve Chairman

Jerome Powell

when he testifies before Congress on both Wednesday and Thursday.

“Investors will be looking for any inkling as to whether Chair Powell’s commitment to another 0.75 percentage point rate hike is serious,” said

Michael Farr,

president of Farr, Miller & Washington.

Both investors and policy makers are eager to see the June print for consumer inflation expectations, due Friday. At his news conference last week, Mr. Powell said the preliminary reading of 5.4% was “eye catching.”

“Markets are going to watch the final read for consumer inflation expectations in the University of Michigan survey. They want to see how aggressive the Fed will have to be,” said

Rob Haworth,

senior investment strategist at U.S. Bank Wealth Management. “If expectations stop accelerating, markets may read that as Fed policy starting to work.”

Investors and analysts say they expect more pain ahead in the markets, though some are still willing to wade in and buy stocks at a discount after a selloff that has dragged the S&P 500 down 21% this year. Many pointed to Tuesday’s recovery as a bounce off last week’s drawdown.

“This still feels like a bit of a dead-cat bounce,” said

Viraj Patel,

global macro strategist at Vanda Research, referring to a term used to describe a brief market rally. He said investors’ willingness last week to dump shares of winning sectors this year, including energy and utilities stocks, might be a signal that this year’s drawdown has entered its latter stages. Still, he said, he believes the selloff “still has legs to go.”

Tuesday’s bullish mood came alongside a selloff in U.S. government bonds, sending the yield on the 10-year U.S. Treasury note higher. The yield on the benchmark note traded at 3.304%, up from 3.238% Friday. Yields and bond prices move in opposite directions.

Government leaders and officials in recent days have tried to assuage an increasingly jittery nation that an economic slowdown isn’t guaranteed. President

Biden

on Monday said he spoke with

Lawrence Summers,

a former Treasury secretary, and reiterated that he doesn’t see a recession as inevitable. Federal Reserve Bank of St. Louis President

James Bullard

also said the economy appears on track for more expansion this year.

Still, many market watchers are bracing for an economic downturn. In a note Monday, a team of

Goldman Sachs

economists increased their outlook for a U.S. recession, citing concerns that the Fed will feel compelled to respond forcefully to inflation data, even if economic activity slows. The team now sees a 30% probability of entering a recession over the next year, versus 15% previously, and a 25% probability of entering a recession in the second year if one is avoided in the first. 

Safe-haven assets retreated Tuesday amid improved investor sentiment.



Photo:

Spencer Platt/Getty Images

U.S. stock market gains were broad-based, with all 11 of the S&P 500’s sectors rising on Tuesday.

Energy stocks led their peers.

Diamondback Energy

rose $9.99, or 8.2%, to $132.28.

Exxon Mobil

climbed $5.36, or 6.2%, to $91.48.

Brent crude, the international benchmark, rose for a second day, climbing 0.5% to $114.65 a barrel. Last week, oil prices fell amid concerns that a possible recession would weigh on energy demand.

Growth stocks, which have been beaten down this year, notched gains. Data and software company Palantir Technologies and chip maker Nvidia both gained more than 4%.

Seema Shah,

chief strategist at Principal Global Investors, said that for now, investors may see value in companies whose shares have been badly beaten down this year. However, she said, she expects the market to fall further once investors begin to see consistent declines in earnings growth.

“I think what you could see is a [modest] rally through the summer…and as you get into the autumn months and the next earnings season, I think a lot of the economic data is going to start to turn and earnings growth is going to start to turn,” she said. Still, she noted, even now, “sentiment is deteriorating very rapidly.”

Overseas, the pan-continental Stoxx Europe 600 rose 0.4%. In Asia, trading was mixed. Hong Kong’s Hang Seng rose 1.9% and Japan’s Nikkei 225 gained 1.8%, while China’s Shanghai Composite lost 0.3%.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Eric Wallerstein eric.wallerstein@wsj.com 

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Business

U.S. Stocks Rise as Volatile Trading Persists

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U.S. stocks were higher Friday, putting major indexes on course to extend the whipsaw moves that have injected fresh volatility into markets this week.

The S&P 500 rose 0.7%. The Dow Jones Industrial Average added 0.3%, and the Nasdaq Composite climbed 1.4%. All three major indexes fell Thursday, closing at their lowest levels since 2020. Thursday’s decline reversed a rally in stocks Wednesday. 

Stock indexes are on track to finish the week with sharp losses as investors have tried to assess inflation, central banks’ response to it and the outlook for the global economy. The Federal Reserve earlier this week approved the largest interest-rate increase since 1994 and signaled it would continue lifting rates this year at the most rapid pace in decades to fight inflation.

Recent rate increases have reversed a prior cycle of loosening monetary policy that allowed prices for both stocks and bonds to rally in recent years. Prospects for repeated rate rises throughout the rest of the year have caused investors to sell out of both assets and lent to fears that rapid tightening could reduce growth. U.S. mortgage rates recently reached their highest level in more than 13 years. Recent economic data reports have shown sharp declines in key sectors.

“The central banks, who have been our friends for a very long time, are telling us we should expect pain,” said Hani Redha, a portfolio manager at PineBridge Investments. “That inflation number is the only thing that matters right now. Even if we see growth slowing a lot, that will not be enough to cause the Fed to change course.” 

Mr. Redha said it is possible that inflation could still climb further in the coming months as energy prices remain elevated. Brent crude, the international benchmark for oil prices, edged down 2.4% to $117.03 a barrel. 

European natural-gas prices edged down 0.6% Friday, putting them up almost 50% for the week. Moscow’s move to slash natural-gas exports to Europe this week has pitched the continent’s energy crisis into a dangerous new phase that threatens to drain vital fuel supplies and kneecap the continent’s economy.

Where in Americans’ household budgets is inflation hitting the hardest? WSJ’s Jon Hilsenrath traces the roots of the rising prices to learn why some sectors have risen so much more than others. Photo Illustration: Laura Kammermann/WSJ

Signs remained that investors sought assets viewed as safe to hold, such as the U.S. dollar and U.S. government bonds. The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, rose 0.9%. In bond markets, the yield on benchmark 10-year Treasurys ticked down to 3.262% from 3.303% Thursday. Yields fall as prices rise. 

The dollar value of bitcoin and other cryptocurrencies showed tepid signs of stabilizing after tumbling sharply over the 10 days prior. Bitcoin was roughly unchanged from its 5 p.m. ET level Thursday to trade at $20,637 Friday. Cryptocurrencies have been hit by rising interest rates that are sapping appetite for riskier assets, and concerns about select projects and companies in the crypto ecosystem. 

Shares of

Adobe

fell 4.1% after the provider of software for creativity, marketing, and documents gave softer-than-expected guidance.

Overseas, the pan-continental Stoxx Europe 600 added 0.7%. Shares of commodity mining and trading giant

Glencore

added 0.8% in London trading after the company raised price and cost guidance for its coal operations and said that its trading business is outperforming expectations.

Stocks on Wall Street closed sharply lower on Thursday, with Dow Jones Industrial Average below 30000.



Photo:

BRENDAN MCDERMID/REUTERS

In Asia, the

Bank of Japan

maintained ultralow interest rates on Friday, confirming that it won’t join the Federal Reserve and other major global central banks in tightening monetary policy. Japan’s Nikkei 225 stock index fell 1.8% and the Japanese yen fell 1.8% against the dollar. 

South Korea’s Kospi edged down 0.4%, while China’s Shanghai Composite added 1%.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

Inflation and the Economy

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Business

U.S. Futures Edge Up After S&P 500 Slides Into Bear Market

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U.S. stock futures edged higher, pointing to muted gains for major indexes after the S&P 500 closed in a bear market for the first time since 2020. 

Futures tied to the S&P 500 added 0.5% after the broad-market index tumbled 3.9% on Monday. Nasdaq-100 futures climbed 0.8%, suggesting a moderate rise in technology stocks after the opening bell. Dow Jones Industrial Average futures inched up 0.4%. 

Global stocks have come under pressure in recent weeks on concerns that major central banks will have to move more aggressively than expected to combat inflation. The latest data release on consumer prices in the U.S. further stoked these fears, as it rose from the previous month to 8.6% and reached the highest level in more than four decades. The S&P 500 declined for the past four straight trading sessions, losing over 10%. The index is down nearly 22% from its last record high.

“I wouldn’t necessarily read a lot into a sort of mini reversal. Things got really oversold and now people are just going to wait for the Fed,” said Colin Graham, head of multiasset strategy at Robeco. 

The Federal Reserve is set to release a monetary policy decision on Wednesday, after a two-day meeting. The Wall Street Journal reported on Monday that the policy makers are considering a surprise 0.75-percentage-point interest-rate increase. 

Some investors are likely to be bargain shopping after such a sharp decline across markets, Mr. Graham said. “At one point yesterday, every single stock in the S&P 500 was down. As long-term investors, we search for value as long as the economic damage isn’t too great.”

Investors are struggling to come to terms with powerful forces in the market: soaring inflation that erodes consumer purchasing power, and the prospect of a recession that could damage company profits and tip weaker companies into failure. One bond market indicator, the yield curve difference between two-year and 10-year government debt, briefly inverted overnight, flashing a warning that a recession could be ahead. In the New York morning, it rose to 0.015 percentage point. 

The U.S. yield curve last inverted in April, when shorter-dated Treasury yields rose more than longer-dated ones on expectations that the Fed could raise rates at a quick pace following a strong jobs report.

Bond markets were broadly more stable on Tuesday. The yield on the benchmark 10-year Treasury note declined to 3.337% from 3.371% on Monday, reversing direction after four consecutive days of rises. Prices rise when yields fall. 

The yield on some shorter-dated bonds rose further, with the two-year edging up to 3.322% from 3.279% the day before, after its biggest two-day jump since the week after Lehman Brothers collapsed, according to an analysis by

Deutsche Bank.

The producer-price index, a measure of inflation for domestic producers, rose 10.8% on a 12-month basis in May, a slight decrease from the previous month.

While many markets have come under pressure this year, rising rates have had a particularly large effect on the shares of money-losing companies that were once pandemic darlings and other speculative bets. Higher interest rates on safe-haven assets such as government bonds tend to reduce the relative appeal of riskier investments—and the perceived value of future cash flows—while lifting corporate borrowing costs.

“I don’t think we’re going to see anything like a V-shaped recovery,” Rick Pitcairn, chief investment officer at Pennsylvania-based multifamily office Pitcairn, said of the stock market. “The way we’ll rebuild will be in a more muted way—it won’t be right back to the high-speculation stocks.”

As markets react to interest-rate hikes and the threat of a recession, stocks are dropping closer to bear-market territory. WSJ’s Gunjan Banerji explains what it takes to push stocks back into a bull market and why it’s hard to predict when they’ll turn around. Illustration: Jacob Reynolds

In premarket trading, business-software firm

Oracle

jumped 12% after reporting a rise in quarterly sales that beat analysts’ expectations, driven by its cloud-computing division. Oil producer

Continental Resources

rose nearly 9% after billionaire

Harold Hamm

offered to buy the shares his family doesn’t already own for around $4.3 billion.

Cryptocurrency platform

Coinbase

tumbled 7% ahead of the bell after it said it will reduce its workforce by about 18%. JPMorgan cut its price target for the stock. 

Bitcoin remained under pressure after selling off sharply in recent days. It traded at about $22,150 on Tuesday, losing another 5%. It is 68% down from its last record high.

Overseas, the pan-continental Stoxx Europe 600 slipped 0.6%. Shares of French IT firm Atos plunged 24% after its CEO resigned and the company said it plans to spin off its big data and security division. 

Bonds issued by the Greek government, one of the weakest European economies, sold off. The 10-year yield rose to 4.607%, the highest level since November 2018.

In Asia-Pacific trading, Australian stocks led losses after the market reopened following a holiday. The S&P/ASX 200 index in Sydney erased 3.6%, its biggest one-day drop in percentage terms in more than two years. 

The Shanghai Composite Index rose 1%, while Hong Kong’s Hang Seng Index closed flat. Japan’s Nikkei 225 fell 1.3%. 

The Japanese yen little changed, hovering close to the weakest level to the dollar in 24 years, which it reached on Monday. 

In commodities, Brent crude, the global oil benchmark, gained 1.4% to trade at $123.90.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Dave Sebastian at dave.sebastian@wsj.com

Shares in Asia remained under pressure on Tuesday.



Photo:

franck robichon/Shutterstock

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Business

Stocks Trade Modestly Higher – WSJ

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U.S. stock indexes edged higher Tuesday, reversing course after a profit warning from

Target

cast a pall over the retail sector.

The S&P 500 rose 0.4%. The Nasdaq Composite ticked up 0.4%, while the Dow Jones Industrial Average increased 0.3%. 

Stocks have swung in recent days, buffeted by shifts in views about the strength of the economy and the likely path for central banks and interest rates. A big concern is that central banks could act too aggressively as they combat inflation and trigger a slowdown in economic growth, or even a recession.  

“We’re still in this constant push and pull about where inflation is going to be, where growth is going to be, and whether we’re going to be in a recession or not,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. 

Target shares dropped 3% after the retailer issued a warning that its profit would decline because it needs to cancel orders or offer discounts to clear out unwanted goods, a potential sign of lower consumer spending. Shares of other big retailers followed, with

Walmart

declining more than 2%.

A significant increase in retail inventories and diminishing demand could cause prices to moderate across most consumer goods in the second half of the year, according to Peter Essele, head of portfolio management at Commonwealth Financial Network.

“That would be a good thing for inflation overall and would help buoy markets higher as inflation continues to decline,” Mr. Essele said.

The trade gap in the U.S. for April narrowed to $87.1 billion, shrinking more than economists had forecast, after reaching a record deficit the prior month. A key release this week will be the consumer-price index on Friday, which will be closely watched for signals on whether inflation is weakening or not.  

Ayako Yoshioka, a senior portfolio manager at Wealth Enhancement Group, said year-over-year inflation is likely to peak, but the pace at which higher prices come down remains uncertain.

“As long as inflation remains elevated and continues to come down very slowly, the Fed is going to increase interest rates in order to combat these high inflation rates,” Ms. Yoshioka said. “It’s a very difficult thing for the Fed to engineer a soft landing.”

On Tuesday, the Reserve Bank of Australia lifted its key policy rate by 0.5 percentage point, more than expected. 

“The Australian central bank’s move, it’s a reminder that central banks can surprise on the upside. What does this tell us about what the Fed will do, what the ECB will do?” Mr. Kamal said. “More aggressive tightening directly equals a higher probability of a recession.”

The yield on the benchmark 10-year Treasury note eased to 2.973% from 3.037% on Monday. Yields fall when prices rise. 

“With yields at 3%, it shows that the market hasn’t decided if we’re going to have a recession or if we have one, how severe it’s going to be,” said Julien Lafargue, chief market strategist at Barclays Private Bank. “That is what you would want to own if you expect a recession.”

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



Photo:

justin lane/Shutterstock

In other corporate news,

Kohl’s

shares jumped more than 9% after The Wall Street Journal reported the department-store chain is in exclusive talks to be sold to retail holding company

Franchise Group.

The deal may value the company at about $8 billion. 

Arcade company

Dave & Buster’s Entertainment

rose 2% after reporting a jump in sales growth.

Shares of BuzzFeed climbed 6%, recovering some ground after plunging 41% on Monday after a ban that prevented executives and major investors from selling shares was lifted.

Twitter

shares rose 1% after Elon Musk threatened Monday to end his acquisition of the social-media platform, saying the company didn’t comply with requests for data about spam accounts. 

Casey’s General Stores

is slated to report after markets close.

Overseas, the pan-continental Stoxx Europe 600 slipped 0.3%. In Asia, major benchmarks were mixed. The Shanghai Composite Index added 0.2%, while Hong Kong’s Hang Seng Index declined 0.6%. Japan’s Nikkei 225 edged up 0.1%. 

The Japanese yen weakened 0.7%, reaching the lowest level against the dollar since April 2002. The yen has sold off this year as the

Bank of Japan

has remained committed to ultra-easy monetary policy, while many other central banks have begun lifting interest rates to combat rapid inflation. 

Cryptocurrencies fell, with bitcoin tumbling 4% and dropping below $30,000. Ether also declined 4%.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Vicky Ge Huang at vicky.huang@wsj.com

As markets react to interest-rate hikes and the threat of a recession, stocks are dropping closer to bear-market territory. WSJ’s Gunjan Banerji explains what it takes to push stocks back into a bull market and why it’s hard to predict when they’ll turn around. Illustration: Jacob Reynolds

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Business

Stock Market Rises After Weekly Loss

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U.S. stocks rose on Monday, at least temporarily changing direction after more than two months of volatility and losses.

The S&P 500 climbed 0.7% in morning trading, while the Dow Jones Industrial Average rose 0.4%. The technology-focused Nasdaq Composite Index was 0.8% higher. The three indexes fell Friday after data showed hiring growth slowed in May, though employers still added a strong 390,000 jobs.

Investors are still trying to balance the positive signs from the jobs report against more cautious recent economic commentary from executives like Tesla’s Elon Musk and JP Morgan’s Jamie Dimon, said AvaTrade chief market analyst

Naeem Aslam.

On top of the jobs market, investors are also watching economic data closely for clues about the Federal Reserve’s path for raising interest rates. Fears that the Fed could aggressively raise rates and potentially drive the economy into recession have stoked volatility in global markets this year. 

While traders and consumers alike are looking for signs that inflation has peaked, the real issue is when inflation will come down to a more neutral rate and how much the Fed and other central banks will have to raise interest rates to get it there, said

Siddharth Singahi,

chief investment officer at IronHold Capital.

A key test for markets will be Friday’s U.S. consumer-price index. The closely watched inflation gauge is expected to rise 8.2% in May from a year earlier, according to economists surveyed by The Wall Street Journal. Excluding food and energy, price growth is expected to cool slightly to an annual rate of 5.9% in May from 6.2% the previous month.

Fed officials have indicated they plan to raise interest rates by half a percentage point at next week’s policy meeting, and by the same amount again in July. If they need to do more, Mr. Singahi said, he believes they will, no matter the market reaction.

“Until that’s resolved, not much is going to change for the market fundamentally,” he said.

Trading has been quieter in recent weeks as investors gear up for coming central bank decisions and crucial economic data. The Dow industrials fell 0.9% last week, the smallest weekly change for that index in about a month. The S&P 500 lost 1.2% last week while the Nasdaq ended down 1%.

“We seem to be in a kind of wait-and-see mode,” said

Craig Erlam,

senior market analyst at Oanda in London. “We’ve entered a phase where a lot of interest-rate increases are priced in. A lot of growth slowdown is priced in. We are still seeing intraday volatility, but it does seem to have stabilized.”

Amid a record hiring streak in the U.S., economists are watching for signs of a possible wave turn. WSJ’s Anna Hirtenstein looks at how rising interest rates over high inflation, market selloffs and recession risks challenge the growth of America’s workforce. Photo: Olivier Douliery/AFP

Shares of

Spirit Airlines

rose 6.1% after

JetBlue Airways

sweetened its offer to buy the company. JetBlue in May launched a hostile takeover of Spirit, which had already agreed to a merger with

Frontier Airlines.

Spirit’s shareholders are set to vote on the Frontier merger proposal on Friday. Shares of JetBlue rose 2%, while Frontier Group shares rose 2.6%.

Tesla

shares rose 1.3%, partially recovering from a 9.2% fall on Friday after Mr. Musk, its chief executive, said the electric vehicle maker would cut 10% of its salaried workforce, citing concerns about the global economy. Mr. Musk on Monday threatened to terminate his deal to buy

Twitter Inc.,

shares of which fell 3.7%.

Amazon.com

shares rose 2.9% to $127.12. Monday will mark the first day of trading since the company executed a 20-for-1 stock split. Before the split, Amazon shares were $2,447 a share.

Shares of

Keurig Dr Pepper

rose 4.4%, while

VICI Properties

rose 4.7% and

ON Semiconductor

rose 5.3% after S&P Dow Jones Indices said the three companies will join the benchmark S&P 500 index this month.

U.S. crude oil slid 0.3% to $118.45 a barrel. Prices for oil have surged this year as Russia’s war in Ukraine has disrupted global commodity markets. The average price of regular gas in the U.S. rose to $4.86 over the weekend, according to AAA.

In the bond market, the yield on 10-year U.S. Treasurys jumped to 3.028%, from 2.940% Friday, as investors sold government bonds. Yields and bond prices move inversely. Bond yields have been on the rise in recent weeks but remain below their recent high of 3.124% set in early May.

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



Photo:

BRENDAN MCDERMID/REUTERS

Overseas, the British pound rose 0.4% against the U.S. dollar to $1.2539 as Prime Minister

Boris Johnson

is set to face a vote of confidence in his leadership on Monday. Mr. Johnson’s poll ratings have fallen amid revelations that he held parties in Downing Street during Covid-19 lockdowns.

The U.K.’s FTSE 100 rose 1.4% after being closed since Wednesday due to the four-day Platinum Jubilee weekend, celebrating Queen Elizabeth II’s 70 years on the throne. 

The pan-continental Stoxx Europe 600 rose 1.2%. Investors in Europe will be watching the European Central Bank’s policy meeting on Thursday, where it is expected to lay out its plans for unwinding bond purchases and raising interest rates. The ECB is expected to raise rates for the first time in 11 years in July as it seeks to contain surging inflation.

Asian markets rallied as China continued to ease Covid-19 restrictions in major cities. China’s Shanghai Composite rose 1.3% while Hong Kong’s Hang Seng Index gained 2.7%. Japan’s Nikkei 225 rose 0.6%.

Write to Chelsey Dulaney at chelsey.dulaney@wsj.com and Paul Vigna at Paul.Vigna@wsj.com

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