Topline
The stock market moved slightly higher on Thursday—clawing back some of its losses from earlier this week—as investors continued to assess recent comments from Federal Reserve officials on the central bank’s plan to combat surging inflation.
Key Facts
Stocks finished positive, rebounding somewhat from this week’s losses: The Dow Jones Industrial Average rose 0.3%, nearly 100 points, while the S&P 500 gained 0.4% and the tech-heavy Nasdaq Composite 0.1%.
Defensive trades like consumer staples and healthcare companies were among the biggest gainers, while shares of Big Tech companies such as Meta and Apple reversed earlier losses and also finished higher.
Helping boost market sentiment were comments from St. Louis Federal Reserve President James Bullard on Thursday, who argued the central bank is “still behind the curve [on fighting inflation]
, but not as much as it looks like,” he said.
Bullard’s comments were slightly more upbeat than that of other Fed officials who recently issued dire warnings on inflation and rising interest rates, which subsequently spooked markets earlier this week.
Thursday’s gains also come after the recent release of minutes from the Fed’s latest monetary policy meeting, which signaled bigger interest rate hikes ahead and detailed a plan to reduce its balance sheet by $95 billion per month.
Despite stocks attempting a comeback, all three major indexes are still down for the week: The Dow has fallen around 0.5%, the S&P 500 nearly 1% and the Nasdaq roughly 2%.
Tangent:
Oil prices, meanwhile, moved slightly higher as well—with U.S. benchmark West Texas Intermediate crude approaching $100 per barrel again—after Congress passed a bipartisan bill to ban Russian energy imports.
Surprising Fact:
Shares of legacy tech giant HP Inc. surged roughly 15% on Thursday after legendary investor Warren Buffett’s Berkshire Hathaway disclosed a large purchase (over 100 million shares) that now makes it the company’s largest shareholder.
Crucial Quote:
“Markets are (very tentatively) trying to stabilize following two days of heavy selling,” explains Vital Knowledge founder Adam Crisafulli, who thinks that some of the “near-term concern around Fed policy feels a bit overdone.”
What To Watch For:
“Pricing pressure will continue and that is a theme we will hear all earnings season,” warns Edward Moya, senior market analyst at Oanda. “The risk that inflation will get so ugly that the Fed will have to send the economy into a recession is now becoming a base case scenario for some traders.”
Further Reading:
Federal Reserve Hints At Bigger Rate Hikes Ahead, Outlines Plan To Shrink Balance Sheet (Forbes)
More Fed Officials Are Sounding The Alarm On Inflation And Spooking Markets (Forbes)
Senate Unanimously Passes Russian Oil And Gas Ban After Biden’s Executive Order (Forbes)
Major Bank Is First To Forecast A Recession—More Could Follow (Forbes)