Wall Street opens higher after falling for two days
Newslooks- NEW YORK (AP)
Stocks are opening higher on Wall Street but are still heading for losses for the week after several days of bumpy trading. Several retailers were posting big gains in the early going Friday after reporting surprisingly strong quarterly results. Gap, Ross Stores and Foot Locker all rose sharply. Energy stocks were lower as crude oil prices dropped about 4%. The S&P 500 was up 0.5%, while the Nasdaq and the Dow were each up about 0.4%. Small-company stocks were up more than the rest of the market. European markets were higher and Asian markets closed mixed overnight.
Wall Street headed higher before the opening bell Friday as earnings season winds down in a week weighed down yet again by anxiety over the Federal Reserve’s next potential interest rate increase. Futures for the S&P rose 0.7% and the Dow inched 0.5% higher. Both indices entered Friday down for the week after closing lower on Thursday when a Fed official suggested U.S. interest rates might have to be raised higher than expected to cool inflation.
James Bullard, president of the Federal Reserve Bank of St. Louis, said Thursday that the U.S. central bank’s main lending rate may have to rise to a level between 5% and 7% in order to quash inflation, which is near a four-decade high. That would require additional sharp increases in the Fed’s benchmark rate, which stands at 3.75% to 4%, up from close to zero in March.
Bullard did acknowledge that the level could decline if inflation were to cool in the coming months.
Fed officials warned previously that rates might stay high for an extended period, but traders hoped signs of slowing economic activity might cause the Fed to back off those plans.
“Fed hawks continued to circle the wagons, repeatedly emphasizing their fight against inflation is far from done,” said Stephen Innes of SPI Asset Management.
There were concerns that the retail sector would take a hit because of the elevated inflation that the Fed is combatting, but that largely failed to materialize this week, with a largely positive showing from major chains.
The U.S. reported this week that retail sales rose 1.3% in October as Americans upped their spending at stores, restaurants, and auto dealers, a sign of consumer resilience as the holiday shopping season begins
Ross Stores jumped more than 16% before the opening bell Friday after the discount department store handily beat sales and profit forecasts and The Gap rose 8% after the owner of Banana Republic, Old Navy and Athleta swung to a profit from a loss a year ago on better-than-expected sales. Foot Locker raised its full year profit expectations after a reporting a very strong third quarter on Friday. Shares jumped 15% before the opening bell.
That’s not to say consumer behavior hasn’t been affected by inflation.
Major retailers say Americans are holding out for sales, refusing to pay full price, with the cost of gasoline, rent, food and almost everything else much higher than it was last year.
And Target reported a huge profit decline, one exception to a strong showing for retailers.
In Europe, the FTSE 100 in London gained 0.8% in midday trading, while the DAX in Frankfurt and the CAC 40 in Paris each climbed 1%.
In Asia, the Shanghai Composite Index lost 0.6% to 3,097.24 and the Nikkei 225 in Tokyo sank 0.1% to 27,899.77. The Hang Seng in Hong Kong shed 0.3% to 17,992.54.
The Kospi in Seoul was less than 0.1% higher at 2,444.48. Sydney’s S&P-ASX 200 added 0.2% to 7,151.80.
India’s Sensex sank 0.6% to 61,348.47. New Zealand, Jakarta and Bangkok gained while Singapore declined.
Investors also worry about the impact of Russia’s war on Ukraine — which has pushed up prices of oil, wheat and other commodities — and increased anti-virus controls in China.
China’s “zero-COVID” approach has caused a supply crunch for some of Asia’s biggest manufacturers, denting economic growth.
In energy markets, benchmark U.S. crude lost $1.05 to $80.59 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $3.95 on Thursday to $81.64. Brent crude, the price basis for international oil trading, fell $1.25 to $88.53 per barrel in London. It lost $3.08 the previous session to $89.78.
The dollar edged down to 140 yen from Thursday’s 140.25 yen. The euro declined to $1.0361 from $1.0364.
