People walk along Wall Street in New York on June 16, 2022. — AFP pic
Tuesday, 21 Jun 2022 11:34 PM MYT
NEW YORK, June 21 — New York shares opened trading today on the upswing, as investors brushed off recession and pandemic fears to capitalise on low prices after last week’s dive.
Stocks took a beating last week, putting in the worst performance since the start of the pandemic, after the Federal Reserve cranked up interest rates and promised more to come in the battle to quell scorching inflation.
Other major central banks have joined the fight — except the Bank of Japan — as fears grow that rising interest rates could cause a global recession.
About 30 minutes into the first session of the holiday-shortened week, the Dow Jones Industrial Average was up 1.7 per cent to 30,383.02.
The broad-based S&P 500, which entered a bear market earlier last week, jumped 2.4 per cent to 3,762.17, while the tech-rich Nasdaq Composite Index gained 2.9 per cent to 11,108.56.
“We’re seeing another classic bear market rally… It’s perfectly normal after such a big decline,” Adam Sarhan of 50 Park Investments told AFP.
“Now, the question becomes is this another bear market rally, which means it’ll last for a little bit of time and then roll over and hit new lows, or is it the bottom, meaning a more sustained rally is going to follow.”
“And at this stage, we just don’t know,” he said, noting it depends on many factors including inflation data and the Fed.
The White House is fighting on all fronts to help American families struggling to make ends meet amid soaring gas and housing prices, while shining a light on the positive economic news, including the strong recovery and solid job market.
US Treasury Secretary Janet Yellen again tried to quell recession fears, saying on Sunday that a downturn is not “inevitable” even while the economy will slow as it “transitions to stable growth.”
But investors also are looking at data showing consumers reining in spending on vacations and eating out, and dwindling business confidence.
All eyes will be on Fed Chair Jerome Powell who will deliver two days of testimony before Congress beginning tomorrow, where he will face questions about the central bank’s handling of the economy and the recession threat.
Among individual shares, Kellogg’s was up 2.6 per cent after announcing the breakfast cereal giant was splitting into three separate companies. — AFP