The S&P 500 and Nasdaq closed higher on Friday while the Dow slipped, capping a turbulent week in which the Federal Reserve, the Bank of Japan and other major central banks all leaned into tighter policy to fight inflation. Oil edged lower on the day even as the war in the Middle East kept crude above $100 a barrel.
Wall Street splits at the close
The S&P 500 rose 0.17% after reversing losses in early trade, and the Nasdaq Composite added 0.40%. The Dow Jones Industrial Average, however, fell 0.18% to end the day lower.
Materials, utilities and real estate stocks led the day's declines, while technology and industrials drove the gains. For the week, the S&P 500 and the Dow notched losses while the Nasdaq posted a weekly gain. Stocks in Europe fared worse, falling 1.1% and posting a weekly loss, while MSCI's gauge of stocks across the globe rose 0.07% yet still posted a weekly loss.
Central banks move together
Monetary policy dominated the week, as the war in the Middle East neared the seven-month mark with few signs of ending. That kept oil prices above $100 a barrel and fanned inflation fears, which in turn pushed up yields across major government bond markets.
According to Reuters: "The market is coming to the realization of a higher interest-rate environment", said Kieran Osborne, chief investment officer at Mission Wealth.
The Bank of Japan raised rates to a 31-year high of 1.25%, a decision two board members opposed. The yen weakened 0.50% against the dollar to 156.76, though it has risen 1.8% so far this month on expectations of faster BOJ hikes.
Also on Wednesday, the Fed raised rates for the first time in three years and shifted to a more aggressive stance on inflation, putting the yen on course for its worst weekly performance against the dollar in two years, down 2%. Meanwhile, the Bank of England left UK rates unchanged Thursday but said it may have to hike if the Iran war drags on, while the European Central Bank flagged the need for further tightening last week. The euro fell 0.10% to $1.1488, and the dollar index was flat at 100.19.
Oil retreats, yields and gold climb
Brent crude fell nearly 1% to settle at $103.87 after a Reuters report that China asked Tehran to help rein in the Houthis, putting crude on course for a weekly decline. The 10-year US Treasury yield pushed beyond 5% this week to its highest level since 2007, last up 5.73 basis points at 5%. Spot gold rose 0.98% to $4,382.59 an ounce.
Source: Investing.com
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