After the worst week of the year, Wall Street rebounded even though it closed with small gains

Stocks edged higher on Monday, recouping some of the losses from Wall Street’s worst week since early December.

The S&P 500 rose 0.3% for its second gain in the past seven days. The Dow Jones Industrial Average rose 0.2%, while the Nasdaq Composite added 0.6%.

Stocks suffered in February after a strong start to the yearbecause reports have shown that inflation and much of the economy as a whole remains more resilient than expected. Although solid economic data is allaying fears that a recession imminent, also forced Wall Street to increase their forecasts of how high the Federal Reserve will raise interest rates and how long it will hold them.

High rates can reduce inflation, but they also increase the risk of a future recession by slowing the economy. They also affect stock prices and other investments.

The rise in interest rate hike expectations was most evident in the stock market. obligations, where yields have soared in recent weeks. On Monday, the performance of 10 year cash It pulled back a bit, which eased some of the pressure on the stock.

The 10-year Treasury yield fell to 3.92% from 3.95% of Friday. Helps set interest rates on mortgages and other large loans. The two-year yield, which is moving more in line with Federal Reserve expectations, fell to 4.80% from 4.81%. It is close to its highest level since 2007.

Economists had expected greater weakness in the economy after the Fed raised rates last year at the fastest pace in decades.

However, in recent weeks, market reports workcosts consumers and his inflation They were stronger than expected. The fear is that if the economy holds up, inflation will be pushed higher. This is why Wall Street’s expectations have changed so much: before, it was thought that the Federal Reserve could soon lower interest rates and now it is thought that it could raise them above 5.25%.

The Federal Reserve’s overnight interest rate is now between 4.50% and 4.75%compared to virtually zero at the start of last year.

Even Monday’s weaker-than-expected durable goods report showed some underlying strength. Excluding transportation-related equipment, orders rose last month to the biggest increase since March. This was much stronger than the decline economists expected.

Economies around the world have remained more resilient than expected, with China easing its anti-COVID restrictions that are hurting businesses and Europe avoiding the worst energy crisis. This has helped support the US economy, according to Sameer Samana, chief strategist for global markets at the Wells Fargo Investment Institute.

“I would call it spirit animal, both in markets and in consumers,” Samana said. “I think there is still a lot of speculation in the markets,” with some of the riskiest stocks and bonds rising in price. “And for the consumers, in some ways the consumer pushed it aside and said it’s harder for me to consume, but I will continue to do so.”

“We can call it persistence you obstinacy, but we’ve seen it with both consumers and investors. And that made the Fed’s job very difficult.

(With AP information)

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