Wall Street is in turmoil as households grow strained

Tokyo – Stocks were mixed on Friday as a dreary week on Wall Street appears to be quietly coming to an end, despite major concerns swirling beneath the surface.

The S&P 500 was little changed in morning trading, posting a sixth straight week of gains of less than 1%. At 10:15 a.m. ET, the Dow Jones Industrial Average was up 20 points, or 0.1 percent, to $33,330, while the Nasdaq Composite was down 0.2 percent.

Despite the seemingly calm movement of the market as a whole, big fluctuations are swirling beneath it. possibility of recessionexpensive inflation And the U.S. government is taking steps towards what is possible. catastrophic default about that loan.

Wall Street isn’t the only one to worry. U.S. consumer sentiment is faltering, according to preliminary research from the University of Michigan. This is worrisome because strong consumer spending is one of the main pillars keeping an already slowing economy from slipping into recession.

Consumer research director Joan Hsu said the June 1 deadline is looming, and the U.S. government could run out of cash to pay bills unless Congress allows more borrowing. It pointed out.

“If policymakers fail to resolve the debt ceiling crisis, this pessimistic view of the economy will exacerbate the dire economic consequences of a debt default,” he said in a statement.

President Joe Biden and congressional leaders postponed a meeting on the debt limit crisis scheduled for Friday until next week. Staff-level talks are expected to continue until the weekend, with the postponement being seen as a sign of positive interaction.

One area under heavy pressure to stabilize this week was PacWest Bancorp shares. The bank is under intense scrutiny as Wall Street searches for the next three U.S. banks to fail. high-profile collapse Since March.

Pacwest is up 1% in a day after plunging when it revealed deposit outflows from the previous week. It rose further in the morning, but is still down nearly 18% so far this week.

Banks are succumbing to the weight of massive interest rate hikes, with some customers pulling deposits in search of higher yields, while the prices of investments they hold are falling.

Because the price is so high, federal reserve have hiked them in blistering pace This is to curb inflation. Reports this week suggested that while inflation has continued to moderate from its peak last year, it is still too high for households and regulators.

Wall Street hopes that easing inflation may persuade the Fed to postpone rate hikes again at its next meeting in June. That would give both the economy, which is slowing under the weight of rising interest rates, and the financial markets, which have long since begun declining prices, some breathing room.

One potential wild card emerged in Friday’s report on consumer sentiment. It suggested that US households are preparing for 3.2% inflation in the long run. That’s higher than last month’s 3% and the highest since 2011.

The Fed’s concern is that if expectations of high inflation take hold, it could change the behavior of shoppers and the wider economy, making inflation even worse.

US Treasury yields rose on the back of consumer sentiment reports. The 10-year U.S. Treasury yield erased previous losses, rising to 3.41% from 3.39% late Thursday. Helps set interest rates for mortgages and other important loans.

The two-year bond yield, which has been rocked by expectations for the Fed, rose to 3.94% from 3.90%.

News Corp rose 7.1%, which said its earnings and sales declines were slower in the latest quarter than analysts had expected.

That’s been the case for much of this earnings season. The report is better than feared, but still weaker than it was a year ago. The S&P 500 constituent companies have been dubbed a so-called ‘earnings slump’ on the momentum to report a decline in his earnings per share for the second straight quarter.

First Solar soared 21% after it announced it would buy European firm Evora AB to accelerate development of high-efficiency tandem devices and other technologies.

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Contributed by AP Business writers Yuri Kageyama and Matt Ott.