Stocks shrugged off an afternoon slump and ended higher on Wall Street on Wednesday after the Federal Reserve announced its first interest rate hike since 2018.

Bond yields also rose as the Fed began to shift its policy focus to fighting inflation. As markets had expected, the Fed raised its short-term rate by 0.25 percentage points. The move marks a move away from keeping the ultra-low interest rates it had in place during the worst part of the pandemic, which were meant to stimulate the economy, by the Fed. Now that prices are rising, that is changing course.

Wednesday:

The S&P 500 rose 95.41 points, or 2.2%, to 4,357.86.

The Dow Jones Industrial Average rose 518.76 points, 1.5%, to 34,063.10.

The Nasdaq gained 487.93 points, or 3.8%, to 13,436.55.

The Russell 2000 Small Business Index rose 61.75 points, or 3.1%, to 2,030.72.

For the week:

The S&P 500 is up 153.55 points, or 3.7%.

The Dow is up 1,118.91 points, or 3.4%.

The Nasdaq is up 592.75 points, or 4.6%.

The Russell 2000 is up 51.05 points, or 2.6%.

For the year:

The S&P 500 is down 408.32 points, or 8.6%.

The Dow is down 2,275.20 points, or 6.3%.

The Nasdaq is down 2,208.42 points, or 14.1%.

The Russell 2000 is down 214.59 points, or 9.6%.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

BANGKOK

Asian stocks were mostly down and oil prices fell on Tuesday after another day of losses on Wall Street, anxiety over the war in Ukraine and an upcoming Federal Reserve meeting on interest rates. keeping global financial markets on edge.

Markets remain confused as investors try to assess the various economic impacts of the war in Ukraine, upcoming rate hikes by central banks and new virus lockdowns in China. Tokyo rose while markets in China, Australia and South Korea fell.

Shares have fallen sharply in Hong Kong recently, falling to nearly six-year lows after neighboring Shenzhen was ordered to shut down to battle China’s worst COVID-19 outbreak in two years.

The Hang Seng index lost 2.4% on Tuesday morning to 19,068.49, while the Shanghai Composite fell 2.1% to 3,157.14.

Tokyo’s Nikkei 225 rose 0.3% to 25,385.11, while Seoul’s Kospi fell 0.6% to 2,630.34. Australia’s S&P/ASX 200 slipped 0.6% to 7,108.80 and shares also fell in Taiwan and Bangkok.

Oil prices fell, easing some inflationary pressure sweeping the world, with U.S. crude falling below $100 a barrel after hitting $130 last week.

U.S. crude fell $4.14 to $98.87 a barrel in electronic trading on the New York Mercantile Exchange. It fell from $6.32 to $103.01 on Monday.

Brent crude, the standard for international oil pricing, fell $3.90 to $103.00 a barrel.

Uncertainty over whether the global economy could be headed for a toxic combination of stagnant growth and persistently high inflation has led to a resumption of the pandemic in question, Russia’s invasion of Ukraine causing the prices of oil, wheat and other commodities produced in the region to skyrocket.

This has led to sharp day-to-day and hour-to-hour reversals in the markets as expectations of worsening inflation rise and fall.

“Markets seem to have tampered with a strange mix of hope, fear and uncertainty,” Mizuho Bank said in a comment.

On Monday, negotiators from Russia and Ukraine met via video conference for a new round of talks, after both sides expressed some optimism in recent days. The talks ended without a breakthrough after several hours. The negotiators took “a technical break”, said Ukrainian presidential aide Mykhailo Podolyak, and planned to meet again on Tuesday.

Investors were already worried before the start of the war because central banks around the world are preparing to end the stimulus measures they injected into the global economy after the outbreak of the pandemic.

Most people expect the Federal Reserve to raise its main short-term interest rate by a quarter of a percentage point on Wednesday. It would be the first increase since 2018, and it would take the federal funds rate down from its all-time high of near zero.

On Monday, the S&P 500 gave up an early gain and closed 0.7% lower at 4,173.11, while the Dow Jones Industrial Average was virtually unchanged at 32,945.24. The Nasdaq fell 2% to 12,581.22.

Shares of smaller companies also fell. The Russell 2000 Index slid 1.9% to 1,941.72.

The pullback came as the 10-year Treasury yield hit its highest level since the summer of 2019.

The 10-year Treasury yield climbed to 2.16% from 2.00% on Friday evening after hitting its highest level since July 2019. The two-year yield, which moves more on expectations of policy changes of the Fed, went from 1.75% to 1.86%. .

The Fed faces the challenge of raising rates just fast enough and high enough to fight inflation without overdoing it and causing a recession.

The war in Ukraine makes the balancing act even more difficult. He’s pushing inflation higher by raising the prices of everything from nickel to natural gas. And it threatens to stunt economic growth.

In currency trading, the dollar rose to 118.34 Japanese yen, its highest level in about six years, from 118.18 yen on Monday night. The dollar tends to serve as a safe haven in times of crisis, and the prospect of higher interest rates enhances its appeal to investors.

The weak yen is a boon for Japanese exporting manufacturers as it makes their products relatively cheaper and more competitive in overseas markets. Shares of Toyota Motor Corp. gained 2.5% early Tuesday,

The euro fell from $1.0941 to $1.0979.

____

AP Business Writers Stan Choe, Alex Veiga, and Damian J. Troise contributed.

BEIJING (AP) — Asian stock markets rebounded on Thursday and oil prices rose after the head of the Federal Reserve said he supported a lower interest rate hike than some had expected.

Shanghai, Tokyo, Hong Kong and Sydney advanced even as Russian forces whose attack on Ukraine rocked financial markets bombarded the country’s second-largest city and besieged two ports.

Wall Street’s benchmark S&P 500 rose 1.9% on Wednesday, recouping this week’s losses after Fed Chairman Jerome Powell said the US central bank was poised to hike its rate director for the first time since 2018. He said he supported a traditional rate hike of 0.25 percentage points instead of the larger hike recommended by some policymakers.

Powell said the impact on the US economy of Russia’s attack is “highly uncertain.”

“Markets reacted positively to the remarks, which is a questionable interpretation of Powell’s nuanced comments,” ING economists said in a report. “Volatility is key here, and uncertainty. That’s not going away anytime soon.”

The Nikkei 225 in Tokyo rose 0.8% to 26,608.21 and the Hang Seng in Hong Kong gained 0.6% to 22,469.66. The Shanghai Composite Index rose 0.1% to 3,487.78.

Seoul’s Kospi gained 1.6% to 2,745.45 and Sydney’s S&P-ASX 200 rose 0.8% to 7,171.10. New Zealand and Southeast Asian markets also grew.

Stock prices have fluctuated wildly as investors try to figure out how the Russian attack will affect supplies of oil, wheat and other raw materials and the global recovery from the coronavirus pandemic.

Traders were already worried about plans by the Fed and other central banks to fight inflation by withdrawing ultra-low interest rates that have boosted stock markets.

The S&P 500 rose to 4,386.54. The Dow Jones Industrial Average gained 1.8% to 33,891.35. The Nasdaq composite advanced 1.6% to 13,752.02.

Over 90% of S&P 500 stocks rose. Technology, finance and healthcare companies accounted for a large share of the rally. Energy stocks also helped push the index higher due to higher oil prices.

Ford Motor Co. jumped 8.4% after announcing it was accelerating its transformation into an electric vehicle company and separating its electric vehicle and internal combustion businesses.

The yield on the 10-year Treasury bond, or the difference between its market price and the payment at maturity, rose to 1.89% from 1.72% on Tuesday. However, yields were still lower than they were before the Russian invasion.

In energy markets, benchmark U.S. crude rose another $2.68 to $113.28 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price base for international oils, added $3.61 to $116.54 a barrel in London.

Both gains were lower than Wednesday’s surge of over $7 a barrel, but still unusually wide margins for a daily change.

Leaders of OPEC and other major oil exporters decided on Wednesday to stick to plans for a gradual increase in production. The coalition, made up of OPEC members led by Saudi Arabia and non-cartel members led by Russia, opted to increase production by 400,000 barrels per day in April.

Also this week, the United States and other major oil consumers at the International Energy Agency agreed to release 60 million barrels of strategic reserves to boost supply. But this had little impact on market prices.

In currency markets, the Russian ruble gained 3.4% against the US dollar, but was still near a record low of less than 1 cent. It has fallen nearly 25% since the attack after Western governments imposed sanctions that cut off much of Russia’s access to the global financial system.

The dollar gained 115.63 yen from 115.58 yen on Wednesday. The euro fell to $1.1097 from $1.1126.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

By Bill SchmickChronicler of the iBerkshires
4:23 p.m. / Friday, February 18, 2022

Over the next three weeks, stocks will likely trade in a wide range. The caveat to this forecast: if the Fed suddenly changes policy, or if a deadly war breaks out in Ukraine. Those are two big ifs. Unfortunately, I can’t predict when or what the next Fed chief will say, or predict Vladimir Putin’s next move.

The next meeting of the Federal Open Market Committee will take place in mid-March. The latest CPI and PPI inflation data show that inflation is accelerating at a much faster pace than economists and the Fed expected. It is almost certain, according to bond market vigilantes, that the Federal Reserve Bank will raise interest rates at that time. So, the only question is whether the rate hike will be 25 or 50 basis points.

This will only be part of the equation. Investors will expect Chairman Jerome Powell to give them more information on how many rate hikes they can expect in the future, and what other monetary tightening the Fed is also planning. The risk will be that the stock market fades and tests the lows if the Fed is seen to be more hawkish on tightening than expected.

That in the meantime, we have something to occupy our attention. This week, market concerns about interest rates were supplanted by Russia’s intentions towards Ukraine. So far, the conflict has played out in the media in a “he said, she said” war of accusations and counter-accusations.

War is never a good thing, suffice it to say. But besides the human costs of such a conflict, there would also be an economic price to pay. The sanctions that the United States and its allies are prepared to impose on Russia in response to perceived aggression would cause damage to the global economy and to the United States as well.

Russia supplies a large part of the products that the rest of the world consumes. The sanctions could immediately cause major price spikes for commodities such as oil, gas and coal. Russia is also a major exporter of rare earth minerals and heavy metals. A third of the world’s supply of palladium (used in catalytic converters), for example, and titanium (think airplanes) is also mined and exported by Russia.

Ukraine is also a major source of neon, an essential input in the manufacture of semiconductors. Ukraine is one of the world’s largest producers of wheat, as well as fertilizer (just like Russia). Hostilities could harm their ability to export or even harvest the country’s wheat supply.

I would expect price spikes in several food items as a result. This would add fuel to the inflation fire and could force the Fed to become even more aggressive in raising interest rates. That wouldn’t be a pretty picture for stock market investors.

To be honest, no one knows if Russia is bluffing or serious about the invasion as the next step. For me, a telltale sign of their intent would be any movement of medical facilities and supplies to troop assembly areas and the border with Ukraine. This week I saw exactly that.

The risk is obvious. A shooting war would likely see the S&P 500 index retest the January 24 lows (4,222). Geopolitical events generally have a limited impact on the stock market unless hostilities are prolonged and wide-ranging. If, on the other hand, a negotiated settlement were to take place, markets would likely soar higher. That “if” word will keep investors nervous and prices in a box with each security capable of driving the markets up or down 1-2%.

A ‘Wall St’ sign is seen above two ‘One Way’ signs in New York August 24, 2015. REUTERS/Lucas Jackson

NEW YORK, Feb 7 (Reuters) – Liquidity in U.S. stocks has fallen to levels not seen during the COVID-19 sell-off two years ago, adding volatility to an already jittery market.

Market liquidity, or the ease with which investors can buy or sell a security without affecting its price, has been on a downward spiral for years. Over the past few weeks, however, traders have been surprised by massive moves.

“Liquidity is abysmal, that’s how I would describe it,” said Rishabh Bhandari, lead portfolio manager at alternative investment management firm Capstone Investment Advisors.

“As soon as someone wants to shift risk, there’s no effective mechanism for people to do that.”

Analysts said liquidity was affected as active investors buying and selling opportunistically were eclipsed by automated trading and passive investment strategies. They also blamed tighter regulations that discouraged risk taking by some brokers.

On Thursday, for example, Facebook’s parent company Meta Platforms (FB.O) plunged into the biggest daily drop ever for a stock of a U.S. company, losing more than $200 billion in market value. Read more

Wall Street’s fear gauge, the Cboe Volatility Index (.VIX) hit a 15-month high of 38.94 last month, amid a plunge in stock prices that left the Nasdaq lower by 9% and the S&P by 5.3% in January in the face of a hawkish shift by the Federal Reserve.

The liquidity problem is not limited to individual stocks. E-mini S&P 500 futures, one of the world’s most followed financial instruments, are also showing a sign of danger.

Low liquidity exacerbates market fluctuations and makes it more difficult for investors to execute buy and sell orders at a desired price. Episodes of low liquidity contributed to wild market swings in March 2020, when the S&P 500 fell about a third from peak to trough as investors worried about a COVID-19-related economic shutdown. .

One measure of stock market liquidity is the depth of the S&P 500 e-mini futures market, which investors use to gain exposure to the US stock market.

These futures contracts typically trade around $50 million in notional value at any given time. That number fell to around $2 million at the end of January, not far from the $1 million to $1.5 million level reached in March 2020, according to Capstone data. It now stands at just under $5 million.

Another liquidity metric shows the share of exchange-traded funds as a percentage of total equity volumes at 45%, the highest in at least two years. Low liquidity in individual stocks has prompted investors to increase their use of equity ETFs, according to JP Morgan.

In addition to the March 2020 selloff, deteriorating market liquidity contributed to stock market corrections in September 2021, October 2020 and December 2018, JP Morgan analysts said in a recent note.

“A similarly sharp deterioration in stock market liquidity conditions appears to have exacerbated recent market movements,” they wrote.

Investors attributed the cash crunch to a variety of factors. On the one hand, they said that tighter regulations in the aftermath of the global financial crisis have reduced the ability of large brokers to take risks.

Another factor has been the shift to market making for securities from humans to machines. According to experts, trading programs sometimes reduce liquidity when volatility increases, which can exacerbate market movements.

Additionally, some investors cited the rise of passive investment strategies. While active managers seeking trading opportunities have always provided liquidity in times of stress, systematic and passive strategies may not be allowed to do so due to strict rules on how and when to trade.

“Liquidity risk is grossly underestimated,” said Steve Sosnick, chief strategist at Interactive Brokers and a former options market maker.

“As investors rush to win stocks, they’re becoming oblivious to the fact that it’s getting harder and harder to get out in droves.”

Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

NEW YORK – Wall Street ended a rather bullish week for stocks on Friday with a mixed end to major indexes and a surge in Treasury yields after a U.S. jobs report shattered investor expectations that the Federal Reserve may soon begin to raise interest rates sharply.

The S&P 500 settled for a 0.5% gain after swinging between a 0.6% decline and a 1.4% gain. The Dow Jones Industrial Average slipped 0.06% after a last-minute selloff. The Nasdaq composite rose 1.6%. All three indexes posted a weekly gain for the second week in a row.

The latest monthly jobs data was the focus of investors’ concerns. The Labor Department said employers added 467,000 jobs last month, tripling economists’ forecasts. Some economists even expected a loss of jobs amid the spike in coronavirus infections in January due to the omicron variant.

The stronger-than-expected data appears to lock in the Fed’s pivot to fighting inflation by raising rates and taking other actions that would ultimately dampen markets. A 13.5% gain for online retail giant Amazon after the company released a strong earnings report helped lift the S&P 500, although more shares fell than rose in the benchmark index.

“Until you get a clearer picture of what the Fed tightening will be like, you should expect volatility to be similar to what we’ve seen over the past two weeks,” said Matt Stucky, senior portfolio manager at Northwestern Mutual. Richness.

The S&P 500 rose 23.09 points to 4,500.53, while the Dow slipped 21.42 points to 35,089.74. The Nasdaq gained 219.19 points to 14,098.01, while smaller shares of the Russell 2000 rose 11.33 points, or 0.6%, to 2,002.36.

Treasury yields jumped immediately after the release of the jobs report on expectations that the Fed will raise short-term interest rates more aggressively than expected. The two-year yield, which tends to move with expectations for Fed stocks, jumped to 1.31%, its highest level since the start of the pandemic.

Most people expect the Fed to raise short-term rates next month from their all-time low of near zero, with the only question being how much.

Any increase would mark a sharp turnaround from much of the past two years, when ultra-low rates drove up prices for everything from stocks to cryptocurrencies. Bonds paying more interest would mean that investors feel less need to chase such risky returns.

That’s why Wall Street has been so shaky over the past month as investors rush to take action to get ahead of the Fed. On the one hand, higher rates will likely mean that equity investors pay lower prices for every dollar of profit a company produces. On the other hand, stock prices could still remain resilient if these corporate earnings continue to rise.

Amazon joined the list of early adopters after announcing stronger results for its latest quarter than analysts expected. Because it’s one of the biggest stocks on Wall Street by market value, its movements have an outsized effect on the S&P 500 and other indexes.

Snap, the parent of Snapchat, soared 58.8% and Pinterest gained 11.2% after its own earnings reports.

Facebook’s parent company fell another 0.3% a day after wiping more than $230 billion from its market value, by far the biggest one-day loss in history for a US company.

Ford fell 9.7% and was another of the heaviest weights in the S&P 500 after reporting weaker-than-expected revenue and earnings for the last quarter.

Information for this article was provided by Elaine Kurtenbach of The Associated Press.

In this photo provided by the New York Stock Exchange, traders work on the floor, Friday, Feb. 4, 2022. Stocks tumble and Treasury yields jump Friday after a U.S. jobs report boosted the Wall Street expectations that the Federal Reserve may soon begin to raise interest rates sharply. (David L. Nemec/New York Stock Exchange via AP)

Global stocks rose to start the week, although markets in China, South Korea and Southeast Asia were closed for the Lunar New Year holiday. London and Frankfurt opened higher. Tokyo and Hong Kong rose while Sydney declined.

Investors had to navigate the markets following the Federal Reserve’s decision to rein in inflation by accelerating interest rate hikes, while ending bond purchases and other stimulus measures that have drive up stock prices.

On Friday, the S&P 500 rose 2.4% for its biggest gain since June 2020. The Dow added 1.7% and the Nasdaq composite jumped 3.1%.

In early trading, the FTSE 100 in London was flat and the DAX in Frankfurt rose 0.3%. The CAC in Paris is down 0.3%.

In Asia, the Nikkei 225 in Tokyo rose 1.1% after the government announced that retail sales in December fell 1% from the 2.5-year high of the previous month. This is explained by a 4% drop in food purchases.

The Hang Seng gained 1.1% while the Sydney S&P-ASX 200 lost 0.2%.

India Sensex rose 1.4% while the New Zealand and Southeast Asian markets advanced.

In energy markets, benchmark U.S. crude gained 29 cents to $87.11 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 21 cents on Friday to $86.82. Brent crude, the price base for international oils, added 38 cents to $88.86 a barrel in London. It advanced 69 cents the previous session to $90.03.

The dollar gained 115.44 yen from 115.23 yen on Friday. The euro fell from $1.1146 to $1.1155.