Stock Market This Week (US): US Fed's proactive approach to curb inflation led the rally

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Stock Market This Week

Stock Market This Week (US)

It was a stellar week for equity investors. For the week, the Nasdaq closed up 4.6%, while the S&P 500 gained 1.9%. The Dow lagged but still gained about 0.8%.

US stock market this week: Stocks movement this week

The US stock market was closed on Monday on account of Independence Day.

All major indices rallied on Tuesday as concerns around possible recession in the US weighed on investor sentiments, but lower interest rates appeared to boost the tech sector. The benchmark 10-year Treasury yield and the 2-year yield inverted on Tuesday - a strong historical track record as a recession indicator. 

The US stocks moved slightly higher on Wednesday. The market opened lower but gained momentum after the Federal Reserve released the minutes from its June meeting. The report indicates that the central bank was committed to bringing down inflation. 

The US stock market continued the rally on Thursday - the S&P 500 notched a four-day winning streak, matching its best stretch of the year. The energy stocks gained the most, reversing some recent losses as oil prices rebounded.

Friday was a volatile trading day for the investors as they reacted to stronger-than-expected jobs report that will likely keep the Federal Reserve on track for its aggressive rate hikes. Health care stocks were among the outperformers.

US stock market this week: Major events

Treasury yield curve & Recession: The closely watched Treasury yield curve is sending a warning that the economy may be falling or has already fallen into recession. Normally, longer duration yields, like the yield on the 10-year note are higher than the shorter duration yields, like that on the 2-year yield. The curve between the 10-year Treasury yield and the 2-year yield has become inverted, meaning the 2-year is now higher than the 10-year.

Job Growth June: Job growth accelerated at a much faster pace than expected in June. It indicates the main pillar of the US economy remains strong despite pockets of weakness. Nonfarm payrolls increased 372,000 in the month, better than the 250,000 Dow Jones estimate. The unemployment rate was 3.6%, unchanged from May and in line with estimates. An alternative measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons fell sharply, dropping to 6.7% from 7.1%.

Fed's Meeting Minutes: Federal Reserve officials at their June meeting said another interest rate increase of 50 or 75 basis points is likely at the July meeting. Policymakers recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist. Officials indicated a series of increases that would take the funds rate to 3.4% this year, above the longer-run neutral rate of 2.5%. 

Twitter Deal Off: Elon Musk called off his deal to buy social media company Twitter. As per the letter released, Twitter has not complied with its contractual obligations. For nearly two months, the company has failed to provide Musk with information about fake or spam accounts. The news sent the Twitter stock tumbling 5% in after-hours trading. Read more.

  • Is the Twitter Deal with Musk called off?

  • How has the US market performed this week?

  • How has the Labour market performed in June?

  • How much will the market fall if a recession comes?