Markets regain footing, mixed open a day after massive sell-off
THIS IS A BREAKING NEWS UPDATE. AP’s previous story follows below.
NEW YORK — U.S. markets are drifting to a lower open on Friday after the previous day’s selloff on new data showing U.S. inflation hit levels not seen since the early 1980s.
Futures for the Dow Jones Industrials and S&P 500 both slipped 0.2% in premarket trading, but had recovered from larger declines earlier on Friday.
Benchmarks fell in London, Paris and Hong Kong. Markets in Japan were closed for a holiday.
Price pressures suggest that the Federal Reserve and other central banks may need to step up interest rate hikes to curb inflation.
Also Thursday, the Dow Jones Industrial Average fell 1.5% and the Nasdaq composite 2.1%. The Russell 2000 Small Cap Index fell 1.6%.
Other economies are also feeling the heat from sharp price increases, with some central banks having already decided to raise interest rates. Others are hesitant – central banks in Thailand, Indonesia and India opted this week to keep key rates unchanged.
Meanwhile, some countries in Asia, such as China and Japan, are facing both higher prices and slow growth and some are still entangled in coronavirus outbreaks that are clouding prospects for their recovery after the pandemic.
The German DAX lost 0.3% while the CAC 40 in Paris lost 1.1%. Britain’s FTSE 100 fell 0.7%.
In Asia, Hong Kong’s Hang Seng slipped 0.1% to 24,906.66, while in Sydney, the S&P/ASX 200 lost 1% to 7,217.30. The Kospi in Seoul fell 0.9% to 2,747.71. Shanghai gave up early gains, shedding 0.7% to 3,462.95.
India’s Sensex fell 1.4% to 58,113.40.
Trading has been volatile this year, with investors wondering how quickly and to what extent the Fed will raise interest rates to rein in soaring inflation. The benchmark S&P 500 index has fallen in three of the past five weeks and now sits 6.1% below the all-time high it hit on Jan. 3.
The strength of the labor market and high inflation have forced the Federal Reserve to start cutting the massive aid it has provided to financial markets throughout the pandemic. Rising interest rates could help curb inflation, but would also put downward pressure on all kinds of investments, from stocks to cryptocurrencies.
In the bond market, yields jumped the most for shorter-term Treasuries. The two-year yield jumped to 1.62% on Thursday from 1.36% the previous day. This rate tends to follow expectations about what the Fed will do.
The 10-year yield was slightly above 2% on Friday, down from 2.05% Thursday night.
In other trading, the benchmark U.S. crude oil gained $1.28 to $91.16 a barrel in electronic trading on the New York Mercantile Exchange. It took 22 cents to $89.88 a barrel on Thursday.
Brent crude, the price base for international oils, added $1.10 to $92.51 a barrel.
The dollar fell to 115.94 Japanese yen from 116.02. The euro slipped to $1.1406 from $1.1430.