Stocks Rebound After Weekly Drop; Treasuries Fall: Markets Wrap - Yahoo Finance

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(Bloomberg) -- Stocks rebounded from their worst weekly decline since March as earnings rolled in. Treasuries fell after remarks from a Federal Reserve official signaled interest rates could remain higher for longer to tame inflation pressures.

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The S&P 500 halted a four-day drop, the Dow Jones Industrial Average added about 1% while the tech-heavy Nasdaq 100 underperformed.

Berkshire Hathaway Inc. climbed toward a record as its results beat estimates. Amazon.com Inc. remained higher after a news report it will meet with the Federal Trade Commission next week in a final push to avoid an antitrust lawsuit. Tesla Inc. slid after saying its chief financial officer stepped down. Apple Inc. was on pace for its longest losing streak this year.

Ten-year US yields resumed an advance that drove them last week to the highest since November. Fed Governor Michelle Bowman said additional hikes “will likely be needed.” Meantime, Fed Bank of New York President John Williams cited the necessity to keep policy restrictive “for some time” — while noting rate cuts may be warranted next year if inflation slows. Traders also awaited the US consumer price index due later this week for clues on the policy outlook.

“The recent broad economic data points to an economy that may be slowing, but very slowly,” said Paul Nolte at Murphy & Sylvest Wealth Management. “The inflation reports due this week will be pulled apart to determine the Fed’s likely next move at their September meeting. Since the Fed is data-dependent, so are the markets.”

Morgan Stanley’s Michael Wilson said that Fitch Ratings’ downgrade of US government debt last week and the ensuing selloff in the bond market suggests that “investors should be ready for potential disappointment” on economic and earnings growth.

A clear majority of investors expect a US recession before 2024 is out, leading them to view the current bull market in stocks as ephemeral and to favor long-term US Treasuries. That’s the takeaway from the latest Markets Live Pulse survey, which showed that roughly two-thirds of the 410 respondents anticipate a downturn in the world’s biggest economy by the end of next year.

Survey respondents appear to be looking past the economy’s current resilience and anticipating further damaging ripple effects from the Fed’s cumulative tightening over the past 16 months.

“It’s important for investors to remain vigilant and not become complacent as the market’s inflation and Federal Reserve fears remain intact,” said Ryan Belanger, founder and managing principal at Claro Advisors. “Gasoline prices have been rising in recent weeks and Thursday’s CPI report may reflect that, which would boost the Fed’s arguments for remaining aggressive with policy.”

More Corporate Highlights:

Campbell Soup Co. agreed to buy Sovos Brands Inc. in a deal valued at $2.7 billion, expanding the soupmaker’s presence in frozen meals and giving it a foothold in the pasta sauce market.
Tyson Foods Inc. declined as it will shut down four additional chicken facilities after fiscal third-quarter sales trailed even the lowest of analyst estimates.
Yellow Corp. fell as it filed for bankruptcy and will remain shuttered after the trucking firm’s long-running financial woes were compounded by a dispute with its labor force.
Sage Therapeutics Inc. dropped after regulators granted approval to its fast-acting pill only for postpartum depression, denying the drug clearance for major depressive disorder.

Elsewhere, wheat rose after Ukraine used sea drones to cripple a Russian naval vessel and an oil tanker over the weekend, posing a risk for a key export route for Russian commodities through the Black Sea. West Texas Intermediate traded near $82 a barrel at the start of the week after rising more than 4% over the previous two sessions.

Key events this week:

Japan household spending, Tuesday
US wholesale inventories, trade, Tuesday
Philadelphia Fed President Patrick Harker speaks, Tuesday
China CPI, PPI, money supply, new yuan loans and aggregate financing, Wednesday
India rate decision, Thursday
US initial jobless claims, CPI, Thursday
Atlanta Fed President Raphael Bostic pre-recorded remarks for employment webinar, Thursday
UK industrial production, GDP, Friday
US University of Michigan consumer sentiment, PPI, Friday