Washington: US stocks swung between gains and losses, with major indexes on track for a blockbuster week as investors speculate the American economy is on firm footing and the Federal Reserve is close to the end of its tightening cycle.
The S&P 500 was little changed after falling more than 1 per cent at the open. It is headed for a fourth weekly gain in five, and is up almost 9 per cent in 2023 after a wild week that brought a raft of corporate earnings, economic data and a Fed policy decision.
Trading was volatile Friday after a trio of weak megacap tech earnings sent futures contracts sharply lower overnight. Losses accelerated in the morning following a strong jobs report that should give the Fed room to remain aggressive if inflation stays elevated. Investors who had cut equity positioning to the bone took the early declines as an opportunity to chase the four-week rally.
Investor reaction in the Treasury market was more straightforward, where policy-sensitive yields spiked higher on the threat of additional rate increases. A strong reading on the American economy’s services sector also bolstered concern that growth hadn’t sufficiently cooled to temper price gains.
“We have this view that as we move from 2022 into ‘23, we will move from a market that has been driven by Fed policy to a market that’s going to move back to being driven by fundamentals,” Ronald James Sanchez, CIO at Fiduciary Trust Co., said on Bloomberg Radio. “We’re in a data-dependent world here and I think that what we’re really experiencing here is a degree of resiliency. That’s what markets are responding to.”
Geopolitical tensions also simmered in the backdrop, with the Biden administration deciding to postpone Secretary of State Antony Blinken’s upcoming trip to Beijing after detecting a Chinese surveillance balloon over sensitive nuclear sites in Montana, two officials said.
