US stock markets steadied in July after a brutal first-half selloff amid soaring inflation, the conflict in Ukraine and the Fed’s move away from easy money. The S&P 500 (.SPX) has closed higher in each of the first four sessions so far this month after posting its biggest first-half percentage drop since 1970. The benchmark has not had five consecutive gains so far in 2022. Sign up now for FREE unlimited access to Reuters.com Register Minutes from the central bank’s June policy meeting, where the Fed raised interest rates by three-quarters of a percentage point, showed on Wednesday a firm restatement of its intention to keep prices under control. read more But Fed officials acknowledged the risk that rate hikes could have a “bigger-than-expected” effect on economic growth and said a 50- or 75-basis-point increase would likely be appropriate at the July policy meeting. The less hawkish tone was echoed in Fed Governor Christopher Waller’s comments on Thursday. Calling fears of a US recession overblown, he backed a 50 basis point hike in September. read more That sentiment was taken as a cue by some to add positions, including high-growth stocks, which had suffered in the first half of 2022 as investors worried about their prospects in a rising interest rate environment. That benefited tech names big and small, with heavyweights Tesla Inc ( TSLA.O ) up 5.5 percent and Google parent Alphabet Inc ( GOOGL.O ) up 3.7 percent and Affirm Holdings Inc (AFRM.O) and Avalara Inc (AVLR.N ) gaining, respectively, 17.1% and 16.4%. “It’s starting to feel like the real money is starting to come back,” said Louis Ricci, chief trader at Emles Advisors. Traders work at the New York Stock Exchange (NYSE) in New York, U.S., June 30, 2022. REUTERS/Brendan McDermid “There’s no reason the market can’t go down another 30%, but we think the risk is 30% to the downside, but three to four times the upside.” Although investors widely expect the Fed to raise interest rates by another 75 basis points in July, expectations for a top terminal rate next year have fallen sharply amid growing concerns about a global economic slowdown. Fed funds futures traders are pricing the benchmark rate to peak at 3.44% in March. Expectations before the June meeting were that it would rise to around 4% by May. It is currently 1.58%. , . Elsewhere, a report on Thursday showed the number of Americans filing new claims for jobless benefits rose unexpectedly last week and demand for labor is slowing as layoffs rose to a 16-month high in June. read more A closely watched employment report on Friday is expected to show that nonfarm payrolls likely rose by 268,000 jobs last month after rising by 390,000 in May. The Dow Jones Industrial Average (.DJI) rose 346.87 points, or 1.12%, to 31,384.55, the S&P 500 (.SPX) gained 57.54 points, or 1.50%, to 3,902.62 and the Nasdaq 5.9 points added (2.9 points or Composite). 2.28%, to 11,621.35. Almost all S&P subsectors were higher, with the energy index’s (.SPNY) gain of 3.5% the top performer as oil and gas companies followed crude prices’ recovery from last year’s 12-week low day. Philadelphia SE Semiconductor ( .SOX ) rose 4.5 percent after South Korea’s Samsung Electronics ( 005930.KS ) posted its best second-quarter profit since 2018 on strong memory chip sales. Volume on US exchanges was 10.47 billion shares, compared to the full session average of 13.08 billion over the past 20 trading days. The S&P 500 hit 2 new 52-week highs and 29 new lows. the Nasdaq Composite recorded 24 new highs and 57 new lows. Sign up now for FREE unlimited access to Reuters.com Register Reporting by David French in New York and Amruta Khandekar, Bansari Mayur Karmdar and Devik Jain in Bengaluru Editing by Anil D’Silva and Matthew Lewis Our Standards: The Thomson Reuters Trust Principles.
