The stock market recovered from a midday stumble and finished higher, staying on track for its first weekly gain in four weeks. The S&P 500 rose 0.7% on Thursday. The Nasdaq Composite and the Dow Jones Industrial Average also finished higher after their own bumpy rides. Interest rate policies came under fire as the European Central Bank made the biggest rate hike in its history, in line with moves by the US Federal Reserve and other central banks to fight inflation . Meanwhile, Fed Chairman Jerome Powell reaffirmed the Fed’s commitment to keep rates high “until the job is done” to control inflation.
THIS IS A LAST MINUTE UPDATE. The previous AP story follows below.
Stocks are modestly higher on Wall Street in choppy afternoon trading Thursday, on track for a weekly gain.
The S&P 500 was up 0.4% at 3:31 p.m. ET. The benchmark index wavered for much of the start, between a low of 0.9% and a high of 0.8%. It is holding on to a 1.8% gain for the week after coming off a three-week losing streak.
The Dow Jones Industrial Average rose 122 points, or 0.4%, to 31,702, while the Nasdaq rose 0.3%.
Stocks have been mostly losing ground in recent weeks after the Federal Reserve signaled it won’t stop raising interest rates anytime soon to curb the highest inflation in decades.
Health care stocks accounted for a large part of the S&P 500’s gains. Regeneron Pharmaceuticals surged 19.5% after the company and its partner Bayer reported encouraging data from a study of a blindness drug.
Banks also helped lift the market. JPMorgan Chase Rose 2%.
Big technology and communications stocks were among the biggest losers. Apple fell 1.1% and Google’s parent company fell 1.1%.
Bond yields increased. The 10-year Treasury yield, which influences interest rates on mortgages and other loans, rose to 3.30% from 3.27% late Tuesday. The two-year Treasury yield, which tends to track expectations for Fed action, rose to 3.49% from 3.44%.
Interest rate policies were in the spotlight for investors as the European Central Bank made the biggest rate hike in its history, in line with moves by the Fed and other central banks to fight inflation. The bank’s 25-member governing council raised its key benchmark by three-quarters of a percentage point on Thursday.
Meanwhile, Fed Chairman Jerome Powell reaffirmed the Fed’s commitment to keep rates high “until the job is done” to lower back to its 2% target.
“There is a history of failed attempts to control inflation, which only raises the ultimate costs to society,” he said during a conference on monetary policy by the Cato Institute, a think tank that promotes libertarian ideas.
The central bank has already raised rates four times this year and markets are expecting it to deliver another whopping three-quarters of a percentage point hike at its next meeting in two weeks.
One of the Fed’s biggest fears is that households and businesses will start to expect inflation to stay high in the long run, which could lead them to start buying in a way that creates a vicious cycle that makes inflation higher. even harder to shake.
The Fed has come under fire for not taking inflation seriously before, and Powell said setting interest rate policy is as much an art as it is a science. He is left with a big question about whether the high inflation plaguing economies around the world is an exception created by the pandemic or the start of something more persistent.
Markets in Europe closed higher and markets in Asia closed mixed. Japan’s benchmark Nikkei 225 index rose 2.3%.
AP business writer Stan Choe contributed to this report.
This story was originally published September 8, 2022 2:51 a.m.
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