Tech Futures Rally After Brutal Trading Week

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Major indexes remain on course to end the week with losses

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Even with possible gains on the horizon when the market opens Friday, US stocks are still on course to end the week sharply lower. As of Thursday’s close, the S&P 500 and Nasdaq Composite were down 4.7% and 6.4% for the week, respectively, on pace for their worst weekly performance since late January. The Dow, meanwhile, is on pace to fall 3.6% and extend its losses into a seventh consecutive week—its longest losing streak since 2001.

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The US stock market’s selloff this week came as investors have had to reckon with the growing risk of a recession, as the Federal Reserve attempts to wrestle inflation under control. Many institutional and individual investors alike have begun to discount the idea that the Fed can engineer a so-called soft landing, during which inflation falls but unemployment stays low and the economy keeps growing.

On Thursday, Fed Chairman Jerome Powell acknowledged that getting inflation under control could create a short-term hit to the economy, saying on the Marketplace radio program that “the process of getting inflation down to 2% will also include some pain.” He repeated his view that further half-percentage point increases would likely be appropriate at coming meetings, but said the central bank could consider larger increases if economic data call for such steps.

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This week’s inflation report offered little solace to investors, especially after data showed that price pressures were largely broad based. Even as gasoline prices eased, prices rose for groceries as well as dining out, airline travel and other services, spooking investors who had hoped that inflation had peaked.

That forced many to sell off riskier investments and pile into assets perceived as safer. Growth and technology stocks, which are typically hurt by higher interest rates, in particular were walloped. But the risk-off sentiment rippled elsewhere, leading to sharp plunges in cryptocurrencies, too.

“This week was like a pivot in the markets. The mood has changed from evaluating if we can live in an economy with higher rates to [investors] asking: ‘Are we on the brink of a recession?’ ” said Florian Ielpo, head of macro at Lombard Odier Investment Managers.

On Friday, however, technology stocks were among those that led the rebound. Tesla,

Nvidia and Netflix each jumped 2.6% or more premarket.

Robinhood surged 21% premarket after Sam Bankman -Fried, the founder of the cryptocurrency exchange FTX, disclosed he bought a 7.6% stake in the brokerage.

Bitcoin climbed 5.7% to about $30,205 on Friday, from its 5 pm ET level of $28,572.24 on Thursday. Yet elsewhere in the cryptocurrency markets, the beleaguered stablecoin TerraUSD continued to spiral lower, trading at 11 cents at 4 am ET. A so-called stablecoin for its typical peg to $1, TerraUSD broke from that level last weekend following a wave of selling of the token. Its sister token Luna has also fallen precipitously this week, trading at half a penny at 4 am, down from more than $60 on Monday.

In the bond market, the yield on the benchmark 10-year US Treasury note climbed to 2.915%, from 2.815% Thursday, reversing a four-day yield slide that came as investors piled back into bonds. Yields climb when bond prices decline.

The Businesshala Dollar Index, which measures the greenback against a basket of other currencies, slipped 0.2%, on pace to break a six-day winning streak.

Overseas stock markets also traded higher Friday. In Europe, the pan-continental Stoxx Europe 600 climbed 1.1%. In Asia, Hong Kong’s Hang Seng added 2.7%, while Japan’s Nikkei 225 jumped 2.6%. The Shanghai Composite gained 1%.

—Caitlin Ostroff contributed to this article.

Write to Caitlin McCabe at [email protected]


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