Stocks Trim Weekly Losses With Friday Gains

The Nasdaq Composite jumped 434.04 points, or 3.8%, to 11805.00, its largest one-day percentage gain since November 2020. The S&P 500 gained 93.81 points, or 2.4%, to 4023.89, while the Dow industrials rose 466.36 points, or 1.5%, to 32196.66. All three indexes finished below highs seen earlier in the session.

The moves higher followed a late-session rally Thursday that helped the Nasdaq Composite eke out a gain. Risk-on sentiment carried into international stock markets overnight. By Friday morning in the U.S., investors were scooping up shares of beaten-down technology companies before the opening bell. 

Even with Friday’s gains, all three major indexes finished the week with losses of at least 2%. The S&P 500 fell 2.4%, while the Nasdaq Composite lost 2.8%, their sixth consecutive weekly declines. The Dow industrials dropped 2.1%.

Traders and investors were unwilling to call a bottom.

“Will this week be the low for the year? I doubt it,” said

Andrew Slimmon,

senior portfolio manager at Morgan Stanley Investment Management. “I wouldn’t be surprised if we get a deeper growth scare sometime this summer.”

Investors are currently confronting issues not seen in decades as inflation continues to hover near a four-decade high. Many traders believe a recession is increasingly likely as the Federal Reserve attempts to get pricing pressures under control. Many institutional and individual investors alike have begun to discount the idea that the Fed can engineer a so-called soft landing, during which inflation falls but unemployment stays low and the economy keeps growing.

Though Mr. Slimmon said he believes there is more short-term pain in store for stocks, he remains optimistic in the longer term, and said he thinks the market will rebound by the end of the year, citing some fairly upbeat earnings reports. More than three-quarters of S&P 500 companies have reported a positive earnings-per-share surprise for the first quarter, in line with prior quarters, according to FactSet.

“I spend a ton of time talking to companies and listening to company conference calls, and what I can tell you is I don’t hear collectively the weakness out of companies that I’m seeing in the stock market,” said Mr. Slimmon said. 

On Thursday, Fed Chairman

Jerome Powell

acknowledged that getting inflation under control could create a short-term hit to the economy. He repeated his view that further half-percentage point increases would likely be appropriate at coming meetings, but said the central bank could consider larger increases if economic data necessitate such steps. Federal Reserve Bank of Cleveland President Loretta Mester said Friday that half-percentage point increases were appropriate at the next two meetings.

This week’s inflation report offered little solace to investors, especially after data showed that price pressures were largely broad based. Gasoline prices eased, but prices rose for groceries and dining out, airline travel and other services, spooking investors who had hoped that inflation had peaked. 

That forced many to sell off riskier investments and pile into assets perceived as safer. Growth and technology stocks, which are typically hurt by higher interest rates, in particular were walloped. The risk-off sentiment rippled elsewhere, leading to sharp plunges in cryptocurrencies. 

“This week was like a pivot in the markets. The mood has changed from evaluating if we can live in an economy with higher rates to [investors] asking: ‘Are we on the brink of a recession?’” said

Florian Ielpo,

head of macro at Lombard Odier Investment Managers. 

On Friday, however, technology stocks were among those that led the rebound.

Nvidia

added $15.31, or 9.5%, to $177.06,

PayPal

advanced $4.54, or 6.1%, to $78.83 and

Netflix

gained $13.33, or 7.6%, to $187.64. The S&P 500’s information technology segment ended the day up 3.4%.

Twitter

TWTR -9.67%

shares fell $4.36, or 9.7%, to $40.72 after Tesla Chief Executive

Elon Musk

tweeted that his deal to buy the social-media company and take it private is “temporarily on hold” pending details on the amount of fake accounts on the social-media platform. Mr. Musk later tweeted that he was committed to the acquisition, helping Twitter trim premarket losses of more than 20%. Tesla shares rose $41.59, or 5.7%, to $769.59.

Twitter CEO

Parag Agrawal

on Friday said “while I expect the deal to close, we need to be prepared for all scenarios,” a day after he internally announced a hiring freeze and cost cuts.

Robinhood

surged $2.13, or 25%, to $10.69 after

Sam Bankman

-Fried, the founder of the cryptocurrency exchange FTX, disclosed a 7.6% stake in the brokerage.

Duolingo

jumped $22.79, or 34%, to $89.77 after the language-learning platform reported a sharp jump in revenue and monthly active users.

Energy stocks were some of the biggest gainers Friday, rising with the price of oil. Brent, the global crude oil benchmark, rose 3.8% to $111.55. Oil prices ticked lower this week, but remain up more than 40% since the start of the year.

Bitcoin rose to $29,800.33 as of 5 p.m. ET Friday, from $28,572.24 on Thursday. Elsewhere in the cryptocurrency markets, the beleaguered stablecoin TerraUSD continued to spiral lower, trading around 13 cents, according to CoinDesk. TerraUSD broke its typical peg to $1 last weekend following a wave of selling of the token. Its sister token Luna also has fallen precipitously this week, trading at less than half a penny, down from more than $60 on Monday.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note climbed to 2.932% from 2.815% Thursday, reversing a four-day slide that came as investors piled back into bonds. Yields climb when bond prices decline.

Overseas stock markets also traded higher Friday. In Europe, the pan-continental Stoxx Europe 600 climbed 2.1%. In Asia, Hong Kong’s Hang Seng added 2.7%, while Japan’s Nikkei 225 jumped 2.6%. The Shanghai Composite gained 1%.

—Caitlin Ostroff contributed to this article.

Write to Caitlin McCabe at caitlin.mcca[email protected] and Corrie Driebusch at [email protected]