US stocks are up after ending September down nearly 5%

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Wall Street began to record a recovery on Friday afternoon after closing September with the worst monthly performance since the coronavirus-induced rout of March 2020.

The S&P 500 rose 1.1% on Friday, although the gain was not enough to recoup losses on Tuesday and Thursday which were set to leave the index down 2.3% for the week .

The blue chip index fell nearly 5% last month, pushed lower by concerns over slowing economic growth and lingering inflation, as policymakers signal they are ready to tighten their policy. Soaring energy prices and the downside risks in China’s industrial and real estate sectors have helped propel the overall market weakness.

Data on Friday showed stronger-than-expected consumer spending in the United States in August, helping allay some concerns about the slowing expansion. Stocks in economically sensitive sectors surged in the wake of the report, with the Dow Jones Transportation Average rising more than 2 percent and the Russell 2000 Small-Cap Equity Index rising 1.7 percent.

The tech-focused Nasdaq Composite Index, which lost 5.3% last month, rose 0.5% during afternoon trading in New York.

The European regional Stoxx 600 index, which hit a record high in early September before losing 3.4% on the month, closed down 0.4% while London’s FTSE 100 fell 0.8%.

Supply chain bottlenecks and a shortage of natural gas pushed consumer price inflation in the eurozone to its 13-year high in September, data showed Friday.

Separate US data showed basic personal consumption spending – the Federal Reserve’s preferred measure of inflation, which excludes food and energy costs – rose 3.6% in August from the previous year, corresponding to June and July levels.

“There’s a point of view out there that the psychology of inflation has set in, people talk about it on the streets, they feel it and once the inflation sets in, it’s gone. with it, ”said John O’Toole, head of multi-asset fund solutions at Amundi.

But O’Toole added that it remained likely that investors would use stock market declines to supplement stocks of companies they saw as having favorable long-term prospects.

Fed Chairman Jay Powell has signaled that the U.S. central bank will soon announce cuts to its $ 120 billion monthly bond purchases, a program that has helped boost lending throughout the pandemic and to drive up the prices of stocks and bonds.

“The idea of ​​a tighter monetary environment going forward is what is driving stocks right now,” said Nitesh Shah, research director at exchange-traded fund provider WisdomTree.

The yield on the 10-year US Treasury bill fell 0.01 percentage point to 1.48% on Friday afternoon. It fell from about 1.3% just over a week ago, after half of Fed officials forecast a hike in U.S. interest rates next year.

Stock market sentiment weakened earlier in the week amid developments in China, where the potential collapse of indebted homebuilder Evergrande highlighted tensions in the economically important real estate sector. The Beijing government is also working to secure energy supplies, heightening fears of rising prices for the rest of the world.

Brent crude, the international benchmark for oil, rose 1% on Friday to $ 79.33 a barrel and is up more than 50% for the year so far.

The dollar index, which tracks the US currency against six others including the euro and pound sterling, fell 0.2% after hitting a one-year high on Thursday.

Not covered – Markets, finance and strong opinion

Robert Armstrong dissects the most important market trends and explains how the best minds on Wall Street are reacting to them. Register now here to receive the newsletter directly in your inbox every day of the week

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