U.S. stocks were moving higher from session lows overnight, but remained lower overall as a new month began Monday.
Major stock indexes rose Friday to end their best month since 2020, clawing back some of their losses from a dismal first half.
The S&P 500 gained 9.1% in July, while the Dow Jones Industrial Average rose 6.7%, the strongest monthly showing for each index since November 2020. The tech-heavy Nasdaq Composite climbed 12% for its best month since April 2020.
Investors have taken comfort in recent days from the idea that slowing economic growth might encourage the Fed to raise rates at a slower clip. They also have been encouraged by positive signals during earnings season, as expectations for quarterly profit growth rose over the past month.
But money managers and strategists are also debating whether stocks can hold on to the recent gains in the face of continued monetary tightening and worrisome signals about the economy. Many are skeptical.
“It seems like the market has prematurely declared victory over inflation,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “It’s completely out of step with what the Fed and Chair Powell laid out this week.”
On Friday the S&P 500 rose 57.86 points, or 1.4%, to 4130.29. The Dow industrials added 315.50 points, or 1%, to 32845.13. The Nasdaq Composite advanced 228.09 points, or 1.9%, to 12390.69. All three gauges ended the week with gains.
Still, the major indexes are deep in negative territory for 2022, after the S&P 500 ended June with its worst first half since 1970. The benchmark is now down 13% for the year.
Conflicting economic signals are forcing investors to chart their paths forward without a clear view into how business conditions will develop in the months ahead.
Data Thursday showed the U.S. economy shrank for a second quarter in a row, meeting one popular definition of a recession. At the same time, employers have continued to add jobs and the unemployment rate has remained low.
Data Friday showed robust growth in consumption and wages, potentially keeping pressure on the Federal Reserve to raise interest rates to bring inflation under control. Worker pay and benefits rose 1.3% in the second quarter — a near record pace — and consumer spending rose 1.1% in June, accelerating from May. Friday’s gains were broad-based, with nine of the S&P 500’s 11 sectors advancing.
Meanwhile, shares were mostly higher in Asia on Monday after the strong close on Wall Street last week, though the latest manufacturing surveys showed weakening factory activity in the region’s biggest economies, China and Japan.
Tokyo’s Nikkei 225 index gained 0.7% to 27,993.35 while the Shanghai Composite index edged 0.2% higher, to 3,259.96. In Sydney, the S&P/ASX 200 rose 0.7% to 6,993.00. The Kospi in Seoul ended nearly unchanged at 2,452.25 and Hong Kong’s Hang Seng edged 0.1% higher to 20,179.94.
Chinese manufacturing’s recovery from anti-virus shutdowns faltered in July as activity sank, a survey showed Sunday, adding to pressure on the struggling economy in a politically sensitive year when President Xi Jinping is expected to try to extend his time in power.
In Europe, inflation surged in July, hitting 8.9% in the 19 European countries that use the euro currency.