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Business

Stocks Pull Back After Last Week’s Rally

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U.S. stocks fell on Tuesday, poised to end the month on a downbeat note after last week’s rally.

The S&P 500 was down 0.4% in afternoon trading, a day after U.S. markets were closed for Memorial Day. After snapping a seven-week losing streak last week, the benchmark index regained ground and was on track to close the month with a slight gain. The Dow Jones Industrial Average shed 0.5%, while the Nasdaq Composite fell 0.1%.

Tuesday’s session will cap another volatile trading month, during which stocks around the world swung wildly as traders tried to assess the outlook for global economies. In the U.S., stocks tumbled shortly after May began and continued falling amid a slew of earnings and economic data that came in worse than expected. 

Throughout the month, profit warnings from companies ranging from

Snap

to

Target

intensified worries about the lingering impact of inflation, and spurred investors to dump shares across several industries.

By mid-May, it seemed the S&P 500 was bound to close in a bear market, defined as a drop of 20% or more from a recent high, before a late-month rally sent stocks higher. The S&P 500 is down about 14% from its January high. 

Professional and individual investors alike waded into last week’s rally in the U.S. markets, finding opportunities to scoop up stocks that have seen their valuations fall. However, the issues that sent stocks declining earlier this month have yet to abate.

Many traders remain worried that the Federal Reserve’s plans to raise interest rates aggressively could tip the U.S. economy into a recession. Meanwhile, concerns about an economic slowdown in China and sustained supply-chain disruptions due to the pandemic and the war in Ukraine have continued to weigh on investors’ minds.

“There’s a bit of market uncertainty just about the pretty rapid rally we’ve had, and whether that can be sustained in a world where inflation is clearly still a factor,” said Brooks Macdonald Chief Investment Officer Edward Park.

European Union leaders took a big step in the economic fight against Moscow over its invasion of Ukraine by agreeing to block 90% of Russian oil imports by year-end. The embargo faced opposition from countries highly dependent on Russian crude, especially Hungary. Photo: Olivier Matthys/Associated Press

New survey data released Tuesday showed U.S. consumer confidence declined slightly in May from the previous months.

Crude prices jumped after European Union leaders said they would impose an oil embargo on Russia over its invasion of Ukraine, but later pared their gains. The sanctions are set to include a ban on insuring ships that carry Russian oil, The Wall Street Journal reported. They would include an exemption for oil delivered from Russia via pipelines, which make up one-third of EU oil purchases from Russia.

Front-month futures for Brent crude, the global benchmark, rose 1% to settle at $122.84 a barrel. West Texas Intermediate, the U.S. marker, slipped 0.3% to $114.67 a barrel.

Nine of the S&P 500’s 11 sectors were down on Tuesday. Consumer-discretionary stocks were the best-performing sector, lifted by a 3.8% rise in the shares of online-commerce giant

Amazon.com.

U.S.-traded shares of

Unilever

surged 9.9% after the consumer-goods company said it would add activist investor Nelson Peltz to its board and disclosed his fund now holds a 1.5% stake.

The S&P 500’s energy sector is on track to finish May with the largest gain among the benchmark index’s 11 groups, extending a trend that has flourished for much of 2022. But even some beaten-down stocks are set to end the month in the green, such as

Netflix,

Robinhood Markets

and

Zoom Video Communications.

“When the S&P 500 is [close to entering] a bear market, that has a big psychological impact on those seeking value,” said

Craig Erlam,

senior market analyst at Oanda. “I think the question repeatedly being asked is, ‘Are we seeing a bottom in the markets?’”

In the bond market, the yield on 10-year Treasury notes rose to 2.842% from 2.748% Friday. Bond yields and prices move in opposite directions.

Bitcoin was trading at about $31,664, according to CoinDesk, rising 1.2% from its price at 5 p.m. ET on Monday.

Overseas, the pan-continental Stoxx Europe 600 fell 0.7%, snapping a four-session winning streak, after eurozone inflation rose faster than expected. Consumer prices rose 8.1% on the year in May—the fastest past since records began in 1997—after climbing at a 7.4% rate in April. The inflation report will likely factor into the European Central Bank’s coming interest-rate decisions. Earlier this month, ECB President

Christine Lagarde

indicated that the central bank could increase its key interest rate in July for the first time in 11 years.

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



Photo:

Courtney Crow/Zuma Press

In Asia, the Shanghai Composite Index rose 1.2% after the city’s government said a two-month lockdown would be lifted Wednesday. The shutdown, designed to limit Covid-19 transmission, had slowed the Chinese economy and added to inflationary pressures elsewhere in the world by gumming up supply chains.

Hong Kong’s Hang Seng rose 1.4%. Japan’s Nikkei 225 fell 0.3%.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com, Joe Wallace at joe.wallace@wsj.com and Alexander Osipovich at alexander.osipovich@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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World

Stocks Waver After Paring Morning Losses

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U.S. stocks edged lower on Tuesday, resuming their recent downward trajectory after last week’s rally.

The S&P 500 dropped less than 0.1% in midday trading, paring losses a day after U.S. markets were closed for Memorial Day. After snapping a seven-week losing streak last week, the benchmark index has regained some ground and is on track for a slight loss this month. The Dow Jones Industrial Average shed 0.1%, while the Nasdaq Composite rose 0.3%.

Crude prices initially jumped after EU leaders said that they would impose an oil embargo on Russia over its invasion of Ukraine, but later pared their gains. The sanctions are set to include a ban on insuring ships that carry Russian oil, The Wall Street Journal reported. They would include an exemption for oil delivered from Russia via pipelines, which make up one-third of EU oil purchases from Russia, limiting some of their market impact.

Futures for Brent crude, the global benchmark, were recently up 0.5% to $118.22 a barrel. West Texas Intermediate, the U.S. marker, rose 2% to $117.38 a barrel, playing catch-up after the market was closed Monday.

Tuesday’s session will cap another volatile trading month, during which stocks around the world swung wildly as traders tried to assess the outlook for global economies. In the U.S., stocks tumbled shortly after the month began and continued falling amid a slew of earnings and economic data that came in worse than expected. 

Throughout the month, profit warnings from companies ranging from

Snap

to

Target

intensified worries about the lingering impact of inflation, and spurred investors to dump shares across several industries.

By mid-May, it seemed the S&P 500 was bound to close in a bear market, defined as a drop of 20% or more from a recent high, before a late-month rally sent stocks racing higher. The S&P 500 is down about 14% from its January high. 

Professional and individual investors alike waded into last week’s rally in the U.S. markets, finding opportunities to scoop up stocks that have seen their valuations fall. However, the issues that sent stocks falling earlier this month have yet to abate.

Many traders remain worried that the Federal Reserve’s plans to raise interest rates aggressively could tip the U.S. economy into a recession. Meanwhile, concerns about an economic slowdown in China and sustained supply-chain disruptions due to the pandemic and the war in Ukraine have continued to weigh on investors’ minds.

“There’s a bit of market uncertainty just about the pretty rapid rally we’ve had,” said Brooks Macdonald Chief Investment Officer

Edward Park,

“and whether that can be sustained in a world where inflation is clearly still a factor.”

European Union leaders took a big step in the economic fight against Moscow over its invasion of Ukraine by agreeing to block 90% of Russian oil imports by year-end. The embargo faced opposition from countries highly dependent on Russian crude, especially Hungary. Photo: Olivier Matthys/Associated Press

New survey data released Tuesday showed U.S. consumer confidence declined slightly in May from the previous months. President Biden is also expected to meet with Fed Chairman

Jerome Powell

Tuesday at the White House. 

Nine of the S&P 500’s 11 sectors were down on Tuesday. The best-performing sector was energy, which rose on the back of climbing oil prices.

Marathon Oil,

Diamondback Energy

and Hess all advanced more than 1%.

U.S.-traded shares of

Unilever

jumped 9.8% after the consumer-goods company said it would add activist investor Nelson Peltz to its board and disclosed his fund now holds a 1.5% stake.

The S&P 500’s energy sector is on track to finish May with the largest gain among the benchmark index’s 11 groups, extending a trend that has flourished for much of 2022. But even some beaten-down stocks are set to end the month in the green, such as Netflix, Robinhood Markets and Zoom Video Communications. 

“When the S&P 500 is [close to entering] a bear market, that has a big psychological impact on those seeking value,” said

Craig Erlam,

senior market analyst at Oanda. “I think the question repeatedly being asked is, ‘Are we seeing a bottom in the markets?’”

In the bond market, the yield on 10-year Treasury notes rose to 2.868% from 2.748% Friday. Bond yields and prices move in opposite directions.

Overseas, the pan-continental Stoxx Europe 600 fell 0.8%, putting it on track to snap a four-session winning streak, after eurozone inflation rose faster than expected. Consumer prices rose 8.1% on the year in May—the fastest past since records began in 1997—after climbing at a 7.4% rate in April. The inflation report will likely factor into the European Central Bank’s coming interest-rate decisions. Earlier this month, ECB President

Christine Lagarde

indicated that the central bank could increase its key interest rate in July for the first time in 11 years.

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



Photo:

Courtney Crow/Zuma Press

In Asia, the Shanghai Composite Index rose 1.2% after the city’s government said a two-month lockdown would be lifted Wednesday. The shutdown, designed to limit Covid-19 transmission, had slowed the Chinese economy and added to inflationary pressures elsewhere in the world by gumming up supply chains.

Hong Kong’s Hang Seng rose 1.4%. Japan’s Nikkei 225 fell 0.3%.

—Alexander Osipovich contributed to this article.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Joe Wallace at joe.wallace@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Global Stocks Rise as China Signals Stimulus for Shanghai

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International stocks rose Monday, extending a rally that has pared some of this year’s losses, while U.S. markets were closed for the Memorial Day holiday.

The Stoxx Europe 600 added 0.6%, led by shares of technology and luxury-goods firms. Germany’s DAX gained 0.8% and London’s FTSE 100 edged up 0.2%.

Global markets were boosted by the looming relaxation of some Covid-19 curbs in China. Shanghai’s Vice Mayor Wu Qing said over the weekend that authorities will loosen the conditions under which companies are able to resume work this week, and the city’s government laid out a 50-point plan for accelerating the economic recovery. The measures include tax cuts for businesses and subsidies for purchases of electric vehicles, the official Xinhua News Agency said.

Futures for the S&P 500 gained 0.6% by noon ET. The U.S. stock market is due to reopen Tuesday, as is the Treasury market. Yields on government bonds retreated from their 2022 highs in the run-up to Friday’s close, helping lift stocks after a weekslong drubbing. The S&P 500 snapped a seven-week losing streak Friday and posted its biggest weekly gain since November.

Still, some money managers caution that the pickup in stocks and bond prices may be a short-lived blip in a longer-running retreat. They say most of the factors that have contributed to this year’s losses—the war in Ukraine, higher interest rates set by the Federal Reserve and a slowing economy—are still in place.

“We are about to see a bear-market rally—or are in the midst of it,” said Daniel Egger, chief investment officer at St. Gotthard Fund Management.

Mr. Egger said yields will begin to rise again and that forecasts for corporate earnings are too high, while profit margins are under pressure from high commodity prices. “This doesn’t bode well for stocks,” he said.

On the economic front, data showed inflation accelerating in major European economies. Germany’s annual inflation rate hit 8.7% this month, according to preliminary figures, the quickest pace since 1973. In Spain, consumer prices rose 8.5% on the year, up from the 8.3% rate recorded in April.

Shares of European luxury-goods companies that have tapped into Chinese demand benefited from the prospect of lighter-touch lockdowns.

Hermès International

gained 3.9% and

Compagnie Financière Richemont

rose 2.9%.

L’Oréal,

the French personal-care company, gained 2.1% and

LVMH Moët Hennessy Louis Vuitton

added 2.6%.

In commodity markets, benchmark Brent-crude futures rose 1.2% to $116.90 a barrel and touched their highest level in more than two months. Leaders of European Union members are due to meet Monday and Tuesday, after diplomats over the weekend failed to strike a deal on sanctions that would limit imports of Russian oil.

Global stock markets were broadly higher on Monday.



Photo:

peter parks/Agence France-Presse/Getty Images

In Asia, the Shanghai Composite Index added 0.6% and Hong Kong’s Hang Seng jumped 2.1%.

In China, companies that serve Chinese consumers registered some of the largest advances. Hot-pot restaurant chain

Haidilao International Holding Ltd.

, brewer

China Resources Beer

(Holdings) Co. and sportswear company

Li Ning Co. Ltd.

, surged between 8.2% and 11% in Hong Kong. 

Chinese internet stocks built on a rally from late last week, as the Hang Seng Tech Index rose 3.9%. The food-delivery giant

Meituan

jumped 6.8%. Chinese e-commerce platform

Pinduoduo Inc.

, whose stock trades in the U.S., on Friday reported better-than-expected quarterly profit and revenue, after similarly strong results from

Alibaba Group Holding Ltd.

and

Baidu Inc.

Investors are hopeful that China is past the worst of its Covid-19 wave in terms of lockdown severity and case numbers, said

Michael Metcalfe,

head of macro strategy at State Street Global Markets. That would lessen one of the forces pushing the world economy into a period of low growth and high inflation, he said.

Nonetheless, Mr. Metcalfe said, inflation remains elevated in both Europe and the U.S., maintaining the pressure on central banks to raise interest rates. “There’s nothing that we see in the current inflation trend that gives us any confidence,” he said.

Write to Joe Wallace at joe.wallace@wsj.com and Dave Sebastian at dave.sebastian@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Stocks End Higher, Lifted by Retailer Results

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U.S. stocks rose Thursday, with the Dow Jones Industrial Average notching a fifth consecutive day higher, after strong results from retailers lifted sentiment across the market.

The blue chips added 1.6%, while the S&P 500 advanced 2%. The tech-heavy Nasdaq Composite climbed 2.7%, helped by gains in shares of

Apple,

Microsoft,

Amazon.com

and

Tesla.

The outlook for stocks turned cheerier Thursday when several retailers delivered strong results.

Macy’s

reported robust sales growth and lifted its earnings guidance, while discount chains

Dollar General

DG 13.71%

and

Dollar Tree

DLTR 21.87%

beat Wall Street’s earnings expectations.

Last week, results from retailers including Walmart, Target and Kohl’s raised concerns that rising costs are eroding profits while inflation prompts some consumers to rethink their budgets.

“After having a real challenging time with retail last week, you’re starting to see some other signs that not everybody in retail is doing poorly,” said

Wayne Wicker,

chief investment officer at MissionSquare Retirement. “It probably provides a little more confidence that the consumer continues to be reasonably strong.” 

Equity investors have endured a particularly volatile period lately. At the end of last week the S&P 500 fell far enough that it was on track to close at least 20% below its January peak. The benchmark then reversed course to avoid closing in bear market territory.

Despite the advances by major indexes this week, many investors expect markets to remain unsettled for some time to come.

“I think we’re going to still go through some more volatility ahead,” said

Leslie Thompson,

chief investment officer at Spectrum Wealth Management.

Investors have been considering how the Federal Reserve’s plans to tighten monetary policy to combat inflation could weigh on economic growth and the performance of financial markets.

Fed meeting minutes released Wednesday showed that policy makers were in agreement for half-percentage point increases in June and July, in line with previous communication. Major stock indexes closed higher after the release. 

“To some extent, markets have been reassured that the Fed isn’t going to tighten more aggressively than what is expected,” said

Luc Filip,

head of investments at SYZ Private Banking.

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



Photo:

justin lane/Shutterstock

Money managers are closely watching fresh data as they gauge the health of the economy. On Thursday a second reading of first-quarter U.S. gross domestic product came in worse than the first with a contraction at an annual rate of 1.5%.

“Economic data has come in weaker than expected lately. We do see this tightening in the economy. How severe the growth slowdown is what markets are thinking about now,” said

Shaniel Ramjee,

a multiasset fund manager at Pictet Asset Management.

Initial jobless claims fell last week and hovered near historic lows, suggesting a mixed economic picture. 

Earnings reports continued to drive moves in individual stocks. Analysts have been scrutinizing results for indications that inflation has begun to weigh on profits.

“We are focusing on earnings and profitability. A lot of stable companies are reporting lower guidance,” Mr. Ramjee said. “Even the tech sector is not immune to margin pressure, especially from input costs like wages.” 

Nvidia

shares rose more than 5% after the chip maker posted record revenue, though its sales outlook for the current quarter came in below Wall Street’s estimates.

Shares of

Williams-Sonoma

jumped 13% after the retailer posted profits that beat analysts’ expectations. Macy’s shares climbed 19% after it raised full-year earnings guidance.

Dollar Tree shares advanced nearly 22% and Dollar General shares rose nearly 14% after the discount retail chains reported profits higher than expectations.

Shares of

VMware

added 3.4% after

Broadcom

confirmed that it will acquire the cloud computing firm for $61 billion in cash and stock. Broadcom shares rose 3%.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note rose to 2.756%, from 2.746% Wednesday. Yields rise as bond prices fall.

Global oil benchmark Brent crude added 3% to trade at $117.40 a barrel.

Overseas, the pan-continental Stoxx Europe 600 rose 0.8%. In Asia, major benchmarks were mixed. The Shanghai Composite Index added 0.5% while Hong Kong’s Hang Seng fell 0.3%. Japan’s Nikkei 225 also declined 0.3%. 

South Korea’s central bank raised a key policy rate to 1.75% on Thursday and signaled it would tighten policy further to keep fighting against high inflation. 

Write to Karen Langley at karen.langley@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com

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Business

Stocks Edge Higher Ahead of Fed Minutes

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U.S. stocks edged up ahead of the release of minutes from the Federal Reserve’s most recent policy meeting, which will be combed for details on the path of coming interest-rate rises. 

After briefly opening lower, stock indexes turned green in early trading. The S&P 500 rose 0.3% after the broad-market index closed down 0.8% on Tuesday. The Nasdaq Composite Index rose 0.4%, a reversal from a sharp selloff in tech stocks the day before. The Dow Jones Industrial Average edged up 0.1%, or 26 points.

Stocks have had a volatile start to the week, buffeted by concerns about the Federal Reserve tightening monetary policy to combat the bout of high inflation and how sharp of a slowdown in growth it could cause. The S&P 500 is down nearly 18% from its last record high in January and briefly fell into bear-market territory last Friday before paring losses.

“It’s been really volatile, to say the least. This is linked to the question of recession, whether that’s coming or not. That’s effectively what the market has been pushing and pulling between,” said Fahad Kamal, chief investment officer at Kleinwort Hambros.  

Minutes from the Federal Reserve meeting earlier this month will be out at 2 p.m. ET and are expected to provide more signals for investors about the outlooks of policy makers on the economy and inflation. U.S. durable goods orders for April increased by 0.4%, a slower pace than economists expected.

The yield on the benchmark 10-year Treasury note was down to 2.73% from 2.758% on Tuesday. It has declined for four of the past five trading sessions. Yields fall when prices rise. 

“The market is pricing the slowdown that will eventually come from the Fed tightening. It also forecasts that inflation in 2023 will slow to much more reasonable levels,” said Antonio Cavarero, head of investments at Generali Insurance Asset Management. 

Government debt tends to perform well during times of slower economic growth, which has led to a stabilization in the bond market in recent days. 

When markets are turning downward, some investors try to make a profit by using a strategy known as buying the dip. WSJ’s Gunjan Banerji tells us why this approach is risky in today’s volatile market, even though it can be tempting. Illustration: Reshad Malekzai

Oil prices climbed with global benchmark Brent crude rising 0.6% to trade at $111.40 a barrel. The U.S. energy secretary said the Biden administration hasn’t ruled out a ban on oil exports to tame domestic fuel prices, Reuters reported.

In individual stocks,

Snap

shares added 2%. The Snapchat maker’s stock plunged 43% on Tuesday after it issued a profit warning, citing macroeconomic conditions that have deteriorated faster and further than expected. 

“Clearly there’s been a revaluation of tech valuations. It’s impossible to know how far it goes, but some of these are quality businesses and significantly cheaper than they have been trading recently,” Mr. Kamal said. “If you’re a long-term investor, that’s going to be something of interest.” 

Retailer Nordstrom climbed 2.4% after raising its guidance for full-year revenue growth. Home builder

Toll Brothers

rose 0.3% after reporting revenue and profit that beat analysts’ expectations. Apparel company

Express

jumped 11% after posting a narrower-than-expected loss and raising sales guidance.

Tech giant

Nvidia

and retailer

Williams-Sonoma

are scheduled to report earnings on Wednesday. 

The tech-focused Nasdaq Composite closed down about 2.4% on Tuesday.



Photo:

justin lane/Shutterstock

Overseas, the pan-continental Stoxx Europe 600 edged up 0.3%. British online grocer

Ocado

fell 5.2% after cutting sales guidance for a joint venture due to rising prices changing consumer behavior. 

In Asia, major benchmarks were mixed. The Shanghai Composite Index added 1.2% while Hong Kong’s Hang Seng ticked up 0.3%. Japan’s Nikkei 225 declined 0.3%. 

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Stocks Drop in Volatile Trading

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U.S. stock indexes opened lower and a selloff in technology stocks deepened, weighed down by growing investor concerns about the outlook for economic growth. 

The S&P 500 fell 1.0% Tuesday, while the Dow Jones Industrial Average lost 0.5%. Contracts for the tech-heavy Nasdaq Composite slid 1.8%. 

The losses point to a sharp turnaround from Monday, when major U.S. indexes rallied after a volatile trading session the previous week. But a profit and revenue warning later on Monday from social-media company

Snap

sent investor sentiment souring again. Asian indexes broadly fell amid declines in technology stocks. European markets also traded lower.

Snap’s shares fell 34% premarket Tuesday as investors digested comments that the macroeconomic environment has deteriorated more than expected. Worries about disruptions to Snap’s advertising revenue rippled to other tech stocks that have been battered this year.

Meta Platforms

shed 8.1% before the opening bell and Google-parent

Alphabet

fell 4.4%.

Investors are confronting a range of signals as they try to map out the trajectory of the U.S. economy. Many have grown worried that the Federal Reserve’s plans for monetary tightening to tamp down inflation could tip the economy into a recession.

Disappointing earnings and warnings across the corporate landscape have exacerbated those fears.

Abercrombie & Fitch

became the latest retailer Tuesday to dent investor sentiment after it swung to a first-quarter loss amid higher costs. The company’s shares tumbled 31% premarket. 

Worries about slowing growth amid higher inflation have been among the catalysts that have sent the S&P 500 falling 17% through Monday from its January high. Investors are now keeping a close watch on whether the S&P 500 enters bear market territory, defined as a drop of at least 20% from a recent high. On Friday, the benchmark index came close to finishing in a bear market, though it was saved by a late-session rally.

There have been glimmers of optimism, however, such as on Monday, when

JPMorgan Chase

said U.S. consumers appear to be in good financial health. But that sanguine depiction was quickly counterbalanced by the disclosure from Snap, a company that had never issued a revenue warning before.

“We’re going to have this roller-coaster ride for some time, as investors cling onto more optimistic data points and get fresh disappointment when there’s another downbeat reading coming through,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “We don’t yet know the full path of interest-rate rises or how resilient consumers will be.” 

Despite Tuesday’s broad premarket technology selloff, there were bright spots in the market.

Zoom Video Communications

advanced 4.9% before the opening bell after the videoconferencing services company raised its profit outlook.

Later Tuesday, Fed Chairman

Jerome Powell

will give remarks at an economic summit in Las Vegas. Investors will be looking for fresh clues about his outlook for inflation, the economy and the path of interest-rate increases.

Several pieces of economic data are also due Tuesday, including U.S. new-home sales data and gauges of U.S. manufacturing activity. Earlier Tuesday, data firm S&P Global said its Purchasing Managers Index for the eurozone’s services and manufacturing sectors fell in May from the month before. Factories in Europe and Japan reported a weakening of new orders amid higher costs and prices, a sign that manufacturing output will slow further over coming months.

Tuesday’s selloff in technology stocks in the premarket session sent investors scooping up government bonds, with the yield on the benchmark 10-year U.S. Treasury note falling to 2.819%, from 2.857% Monday. Yields fall when bond prices rise. 

Gold, considered another haven asset, advanced 0.3% to $1,853.70 a troy ounce.

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



Photo:

Spencer Platt/Getty Images

Brent crude, the international oil benchmark, rose 0.2% to $113.66 a barrel, reversing losses from earlier in the session. 

“You’ve got this push and pull with oil prices—oil prices are being kept down somewhat by global growth, which is not a great signifier for the health of the global economy,” Ms. Streeter said. “But at the same time, it’s not dropping any further because of concerns about tight supply.” 

In Europe, the pan-continental Stoxx Europe 600 lost 0.6%. In Asia, Hong Kong’s Hang Seng fell 1.7%. Japan’s Nikkei 225 lost 0.9% while China’s Shanghai Composite declined 2.4%.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

U.S. Stocks Rise After Brutal Trading Week

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U.S. stocks were higher Friday after a punishing week of losses across major indexes. 

Traders welcomed the reprieve from the brutal spring selloff that has left virtually no corner of the market unscathed. This week brought several shocks for the market. Data showed inflation is still running hot, disappointing investors. Cryptocurrencies swooned after a so-called stablecoin unexpectedly crashed. The S&P 500 on Thursday flirted with bear market territory, a level 20% lower than a recent high, and the Dow Jones Industrial Average is on pace to post weekly losses for the seventh consecutive week, its longest losing streak in more than 20 years.

The Nasdaq Composite jumped about 3% in recent trading, while the S&P 500 gained 1.8% and the Dow industrials rose 270 points, or 0.9%. All three indexes were down from highs seen earlier in the session.

The moves higher followed a late-session rally Thursday that helped the Nasdaq Composite eke out a gain. Risk-on sentiment carried into international stock markets overnight. By Friday morning in the U.S., investors were scooping up shares of beaten-down technology companies before the opening bell. 

Still, traders and investors were unwilling to call a bottom.

“Will this week be the low for the year? I doubt it,” said

Andrew Slimmon,

senior portfolio manager at Morgan Stanley Investment Management. “I wouldn’t be surprised if we get a deeper growth scare sometime this summer.”

Investors are currently confronting issues not seen in decades as inflation continues to hover near a four-decade high. Many traders believe a recession is increasingly likely as the Federal Reserve attempts to get pricing pressures under control. Many institutional and individual investors alike have begun to discount the idea that the Fed can engineer a so-called soft landing, during which inflation falls but unemployment stays low and the economy keeps growing.

Though Mr. Slimmon said he believes there is more short-term pain in store for stocks, he remains optimistic in the longer term, and said he thinks the market will rebound by the end of the year, citing some fairly upbeat earnings reports. More than three-quarters of S&P 500 companies have reported a positive earnings-per-share surprise for the first quarter, in line with prior quarters, according to FactSet.

“I spend a ton of time talking to companies and listening to company conference calls, and what I can tell you is I don’t hear collectively the weakness out of companies that I’m seeing in the stock market,” said Mr. Slimmon said. 

On Thursday, Fed Chairman

Jerome Powell

acknowledged that getting inflation under control could create a short-term hit to the economy, saying on the Marketplace radio program that “the process of getting inflation down to 2% will also include some pain.”

He repeated his view that further half-percentage point increases would likely be appropriate at coming meetings, but said the central bank could consider larger increases if economic data necessitate such steps.

This week’s inflation report offered little solace to investors, especially after data showed that price pressures were largely broad based. Even as gasoline prices eased, prices rose for groceries as well as dining out, airline travel and other services, spooking investors who had hoped that inflation had peaked. 

The last time inflation was this high, the Federal Reserve raised rates so much that it put the U.S. into a recession. Will we see a repeat of that today? WSJ’s Dion Rabouin breaks down why the Fed’s next steps are crucial. Photo: Kevin Dietsch/Getty Images

That forced many to sell off riskier investments and pile into assets perceived as safer. Growth and technology stocks, which are typically hurt by higher interest rates, in particular were walloped. But the risk-off sentiment rippled elsewhere, leading to sharp plunges in cryptocurrencies, too. 

“This week was like a pivot in the markets. The mood has changed from evaluating if we can live in an economy with higher rates to [investors] asking: ‘Are we on the brink of a recession?’ ” said

Florian Ielpo,

head of macro at Lombard Odier Investment Managers. 

On Friday, however, technology stocks were among those that led the rebound.

Nvidia

added 9.3%,

PayPal

advanced 5.4% and

Netflix

gained 4.5%.

Twitter

TWTR -10.16%

shares fell 8.5% after

Tesla

Chief Executive

Elon Musk

tweeted that his deal to buy the social-media company and take it private is “temporarily on hold” pending details on the amount of fake accounts on the social-media platform. Mr. Musk later tweeted that he was committed to the acquisition, helping Twitter trim premarket losses of more than 20%. Tesla shares were recently up 7%.

Robinhood

surged 24% after

Sam Bankman

-Fried, the founder of the cryptocurrency exchange FTX, disclosed he bought a 7.6% stake in the brokerage.

Duolingo

jumped 39% after the language-learning platform reported a sharp jump in revenue and monthly active users.

Bitcoin climbed to about $30,419 on Friday, from its 5 p.m. ET level of $28,572.24 on Thursday. Yet elsewhere in the cryptocurrency markets, the beleaguered stablecoin TerraUSD continued to spiral lower, trading at 11 cents. TerraUSD broke its typical peg to $1 last weekend following a wave of selling of the token. Its sister token Luna also has fallen precipitously this week, trading at half a penny, down from more than $60 on Monday.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note climbed to 2.928%, from 2.815% Thursday, reversing a four-day yield slide that came as investors piled back into bonds. Yields climb when bond prices decline. 

Overseas stock markets also traded higher Friday. In Europe, the pan-continental Stoxx Europe 600 climbed 1.6%. In Asia, Hong Kong’s Hang Seng added 2.7%, while Japan’s Nikkei 225 jumped 2.6%. The Shanghai Composite gained 1%.

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



Photo:

John Minchillo/Associated Press

—Caitlin Ostroff contributed to this article.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Corrie Driebusch at corrie.driebusch@dowjones.com

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Business

Citigroup Sales Hit European Stock Markets With ‘Flash Crash’

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Several European stock markets suffered a “flash crash” on Monday morning following sell orders by

Citigroup Inc.,

C 1.04%

according to people familiar with the matter.

Trading was halted momentarily in several markets after major stock indexes plunged for a few minutes just before 10 a.m. Central European time. Stocks in the Nordic region were hit the hardest, though other European stocks also tumbled briefly on a day when share prices around the globe declined.

Nasdaq and

Euronext

NV, which operate stock exchanges across the region, said they are investigating the cause. Nasdaq said it hasn’t seen any reason to cancel trades.

The nature and extent of the sales by

Citi

group weren’t immediately clear. Citi declined to comment.

Investors thought the incident may have been caused by human error, known in industry parlance as a “fat finger.” 

The trading floor of the Amsterdam Stock Exchange, which is operated by Euronext.



Photo:

Yuriko Nakao/Bloomberg News

Sweden’s benchmark index, the OMX Stockholm All-Share, fell nearly 8% before largely rebounding. Denmark’s equivalent index fell over 6% around the same time and also mostly recovered. Both closed down around 2%.

Markets run by Amsterdam-based Euronext also tumbled before largely recovering. The Dutch AEX index fell 3% and Belgium’s BEL20 declined over 5%. France’s CAC40 fell 3%. These indexes ended the day down more than 1%. 

Euronext temporarily halted trading to try to lower the impact on markets, according to a spokesman. Nasdaq said it used circuit breakers in the immediate aftermath of the crash on major stocks on Nordic exchanges, including

Kone

Oyj and

Stora Enso

Oyj.  

Fat finger trades can be costly. In 2009, an oil trader on a bender placed around $520 million of trades for crude oil, saddling his company with $10 million in losses. In 2012, financial services firm Knight Capital lost $440 million from a computer-trading glitch that entered millions of trades in less than an hour.

Citigroup

C 1.04%

has a history of untimely errors. In 2020, it was ordered by regulators to clean up systems meant to safeguard the bank and its clients and fined $400 million. It is spending billions of dollars to transform its technology and inner workings, a cost that has investors anxious. Chief Executive

Jane Fraser

has said it is the bank’s top priority to get it right.

The most recent pratfall came in August 2020, when Citigroup bankers accidentally paid the bondholders of client

Revlon Inc.

nearly $900 million.

On Monday, Citigroup shares were up fractionally in New York at $48.48.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and David Benoit at David.Benoit@wsj.com

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Business

Stocks Turn Higher After Tech-Led Selloff

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U.S. stocks rose Wednesday in choppy trading, clawing back some of their losses after selling off sharply a day earlier.

The S&P 500 gained 1.4% in afternoon trading, while the Dow Jones Industrial Average added 1.2%, or about 407 points. The technology-focused Nasdaq Composite advanced 1.4%. The gains were broad-based, with 10 of the S&P 500’s 11 sectors rising. Only the communications services group lost ground.

On Tuesday, the Nasdaq recorded its largest one-day percentage decline since September 2020, while the Dow dropped more than 800 points, as investors digested earnings reports and weighed concerns about inflation, the prospect of rapid policy tightening by the Federal Reserve and the spread of Covid-19 in China.

Major U.S. stock indexes are down substantially for the year, with the S&P 500 down 11% and the Nasdaq Composite down 19%. On Tuesday, the Nasdaq closed at its lowest level since December 2020, wiping out the gains it notched in 2021. The Russell 2000 index of small-cap companies closed Tuesday at its lowest level since December 2020. 

Investors said they looked at Wednesday’s moves higher as a temporary relief rally.

“Stocks have been so weak so far this month I believe investors are seeing some value in the current pricing,” said

Tracie McMillion,

head of global asset allocation strategy at Wells Fargo Investment Institute.

Seema Shah,

chief strategist at Principal Global Investors, said she sees the next moves in the stock market as either sideways or down. 

Earnings are “supporting the market to some extent, but I don’t think it’s enough to support it higher,” Ms. Shah said. She said her team has moved to a neutral recommendation on their overall equity positions. 

“The risks are just piling up,” she said. “We don’t want to be picking up pennies in front of the steamroller.”

Many big companies are reporting earnings this week, with results due after Wednesday’s closing bell from companies including Facebook parent

Meta Platforms

and

Ford.

Twitter,

which this week agreed to sell itself for $44 billion to Elon Musk, is set to report Thursday.

Nearly 80% of S&P 500 companies that have reported earnings so far have surpassed analysts’ estimates,

FactSet

data show. Still,

Emily Roland,

co-chief investment strategist at John Hancock Investment Management, said investors remain focused on a number of wide-ranging issues weighing on markets.

“Markets are mostly focused on some of the macro concerns around aggressive tighter Fed policy, as well as this global growth scare that’s playing out,” she said.

Many of those concerns have driven the dollar to its highest level in more than two years. The dollar tends to strengthen when the global economy sours and when investors expect U.S. growth to outpace the rest of the world. Rising interest rates in the U.S. also typically benefit the greenback as higher rates attract yield-seeking investors to the currency. 

The ICE U.S. Dollar Index, which tracks the currency against a basket of others, rose 0.9% to 103.23, on pace to finish at its highest level since January 2017 and surpass even the coronavirus-induced market downturn of March 2020. Including Wednesday, the index has risen for all but two of April’s 18 trading sessions. 

In the bond market, the yield on the 10-year U.S. Treasury note rose to 2.786% on Wednesday from 2.773% on Tuesday. Recently, investors have sold bonds in anticipation of higher interest rates, and the yield on the benchmark note remains close to its highest level since 2018. Bond yields and prices move inversely.

Natural-gas prices in Europe rose 3.8%, after earlier leaping more than 20% on Wednesday. The moves came after Russia said it would halt gas flows to Poland and Bulgaria over their refusal to pay on Moscow’s new terms. Brent crude, the international benchmark for oil prices, fell 0.3% to $104.26 a barrel. 

Among individual stocks,

Tesla

shares added 2.9%, on pace to recoup some of their losses after tumbling 12% Tuesday, its biggest one-day drop in more than a year. Twitter shares fell 3% to $48.26, about 11% below the $54.20 per-share-price that

Elon Musk

and Twitter agreed to in their deal to take the company private.

Boeing

shares were recently down 8.9%. The company posted a $1.24 billion quarterly loss and again pushed back the expected first delivery of its new 777X twin-aisle jet.

Microsoft

shares jumped 6.4% after the company on Tuesday reported higher revenue and profit last quarter as demand for its cloud services and software continued to climb. 

On Tuesday, the Nasdaq Composite recorded its largest one-day percentage decline since September 2020, while the Dow dropped more than 800 points.



Photo:

Michael Nagle/Zuma Press

Chipotle Mexican Grill

shares added 1.9% after the burrito chain said total revenue increased 16% last quarter amid higher food, beverage and packaging costs—which the company said was partially offset by menu-price increases. 

Lucid Group

shares gained 3% after the company late Tuesday said the government of Saudi Arabia had agreed to purchase up to 100,000 vehicles over a 10-year period. 

Shares of Google parent

Alphabet

fell 3.7% after the technology behemoth posted slower sales growth amid disruptions in digital advertising spending.

Robinhood Markets

shares fell 5.1% after the online brokerage said it was laying off 9% of its full-time employees. The company is set to report earnings Thursday.

European stocks rose, with the Stoxx Europe 600 closing up 0.7%. Major markets in Asia were mixed, with benchmarks in Japan and South Korea falling more than 1% and Chinese indexes gaining.

The CSI 300 index of the largest stocks listed in Shanghai and Shenzhen rose 2.9%, recouping some of its recent losses. In Hong Kong, the Hang Seng Index was up 0.1%.

The rebound came after China on Tuesday reported its lowest tally of Covid-19 cases in three weeks, and President

Xi Jinping

highlighted the importance of infrastructure for economic growth, singling out transport, energy and water conservation. Machinery and building-materials stocks jumped.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com, Dave Sebastian at dave.sebastian@wsj.com and Karen Langley at karen.langley@wsj.com

How the Biggest Companies Are Performing

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