Market rebounds but still ends the week in the red
Stocks on Wall Street shook off a downbeat start and ended broadly higher Friday, though the rebound was not enough to erase their losses for the week.
The S&P 500 rose 1.1% after having been down 0.9% in the early going. The gain snapped a four-day losing streak for the benchmark index, which still posted its fourth losing week in the last five.
The Dow Jones Industrial Average rose 1%, while the tech-heavy Nasdaq gained 0.9% after a selloff in technology stocks eased.
The latest choppy trading comes a day after the S&P 500 closed out its worst quarter since the onset of the pandemic in early 2020. Its performance in the first half of 2022 was the worst since the first six months of 1970.
The S&P 500 has been in a bear market since last month, meaning an extended decline of 20% or more from its most recent peak. It's now down 20.2% from the peak it set at the beginning of this year.
Bond yields fell significantly. The yield on the 10-year Treasury, which helps set mortgage rates, fell to 2.89% from 2.97% Thursday. The yield on the 2-year Treasury slipped to 2.83% from 2.92%.
The market's deep slump this year reflects investors' anxiety over surging inflation and the possibility that higher interest rates could bring on a recession.
“What we're seeing today is reflective of really what we're going to see here in July, which is continued pressure on the markets, unless we see outsized economic reports on jobs or inflation, or some more meaningful change in Fed policy,” said Greg Bassuk, CEO at AXS Investments.
The S&P 500 rose 39.95 to 3,825.33. Roughly 85% of the stocks in the index finished higher.
The Dow gained 321.83 points to 31,097.26, while the Nasdaq rose 99.11 points to 11,127.85. The Russell 2000 index of smaller companies rose 19.77 points, or 1.2%, to 1,727.76.
The market's latest gyrations precede a long holiday weekend. Financial markets in the U.S. will be closed on Monday for Independence Day.
The latest economic update on Friday for the manufacturing sector shows a continued slowdown in growth in June that was sharper than economists expected. On Thursday, a report showed that a measure of inflation that is closely tracked by the Fed rose 6.3% in May from a year earlier, unchanged from its level in April.
Earlier this week, a worrisome report showed that consumer confidence slipped to its lowest level in 16 months. The government has also reported that the U.S. economy shrank at an annual rate of 1.6% in the first quarter and weak consumer spending was a key part of that contraction.
Kohl's dove 19.6% after the department store's potential sale fell apart amid the shaky retail environment as consumers lose confidence and cut spending. Kohl's had entered exclusive talks with Franchise Group, the owner of Vitamin Shop and other retail outlets, for a deal that was potentially worth about $8 billion.
Other retailers, restaurant chains and companies that rely on direct consumer spending helped lead the market rally. Amazon rose 3.2%, Home Depot gained 1.8% and Starbucks rose 3.8%.
Banks and health care stocks also notched gains. Wells Fargo rose 1.9% and Johnson & Johnson closed 1.1% higher.
Technology stocks largely bounced back from their broad morning slump, though many still closed lower. Chipmaker Micron slid 3% after giving investors a disappointing profit forecast amid concerns about falling demand. That weighed heavily on other chipmakers. Nvidia fell 4.2% and Qualcomm lost 3.3%.
TikTok concedes that some China-based staff can see U.S. user data
TikTok, the viral videosharing app owned by China's ByteDance, said certain employees outside the U.S. can access information from American users, stoking more criticism from lawmakers who have raised alarms about the social network's data-sharing practices.
The company's admission came in a letter to nine U.S. senators who accused TikTok and its parent of monitoring U.S. citizens and demanded answers on what's becoming a familiar line of questioning for the company: Do China-based employees have access to U.S. users' data? What role do those employees play in shaping TikTok's algorithm? Is any of that information shared with the Chinese government?
China-based employees who clear a number of internal security protocols can access certain information on TikTok's US users, including public videos and comments, TikTok Chief Executive Officer Shou Zi Chew said in the June 30 letter obtained by Bloomberg. None of that information is shared with the Chinese government, he said.
The social network said it's working with the U.S. government on strengthening data security around that information — particularly anything defined as “protected” by the Committee on Foreign Investment in the US, or CFIUS. This new effort, called “Project Texas,” includes physically storing U.S. information in data centers on U.S. servers owned by software giant Oracle Corp. TikTok is also shifting its platform to Oracle's cloud infrastructure, which means the app and the algorithm will be accessed and deployed for U.S. users from domestic data centers.
“TikTok's response confirms our fears about the CCP's influence in the company were well founded,” Republican Sen. Marsha Blackburn of Tennessee told Bloomberg on Friday. “The Chinese-run company should have come clean from the start, but it attempted to shroud its work in secrecy. Americans need to know if they are on TikTok, Communist China has their information.”
User alert: Meta shutting down its crypto Novi project in September
The remainder of the cryptocurrency project that Meta Platforms Inc.'s founder Mark Zuckerberg took a beating over from Congress is officially shutting down.
Meta's Novi pilot — a money-transfer service using the company's own cryptocurrency digital wallet — will end on Sept. 1, the service said on its website, a link to which it texted to its users.
Both the Novi app and Novi on WhatsApp will no longer be available, the company said on the Website. Starting July 21, users will no longer be able to add money to their accounts, Novi said, advising users to withdraw their balance “as soon as possible.” Users won't be able to access their transaction history or other data after the pilot ends.
The company does plan to use Novi's technology in future products, such as in its metaverse project, a company spokesperson said in an email.
“We are already leveraging the years spent on building capabilities for Meta overall on blockchain and introducing new products, such as digital collectibles,” Meta said in the statement. “You can expect to see more from us in the web3 space because we are very optimistic about the value these technologies can bring to people and businesses in the metaverse.”
Meta launched Novi pilot in October of last year amid scaled back ambitions to dominate the crypto remittances space. Instead of a new Diem token Meta once backed, Novi ended up using Paxos Trust Co.'s USDP stablecoin to allow wallet users from parts of the U.S. and Guatemala to conduct transactions. Coinbase Global Inc. was safeguarding the funds.