Why Are Stocks Up Today?

  • The S&P 500 and Nasdaq closed in the green today
  • Today’s upswing marks the first positive day for the stock market this week
  • The S&P will still log its sixth weekly decline despite today’s jump
Street sign for Wall Street pictured in front of several American flags representing american stocks
Source: Shutterstock

Stocks are finally up today on hopes that the Federal Reserve may actually manage to curb inflation without sending the markets into a tailspin. After four days in the red, today’s uptick comes as a welcome surprise to investors hoping for signs of life. The S&P 500 closed up about 2.4%, taking back much of this week’s losses. Some even think today’s jump could mark the end of the stock market’s 2022 correction.

Earlier this month, Fed Chairman Jerome Powell announced interest rate hikes of 0.5% as a measure to combat inflation. While Powell suggested more hikes of 50 basis points are likely, he also assured investors the Fed was not currently considering larger hikes of 75 or 100 basis points. This may well be part of the argument behind today’s upswing.

On Thursday, Powell did maintain the importance of getting inflation back down, even arguing that a short-term hit to financial markets may be a necessary cost.

“The process of getting inflation down to 2% will also include some pain, but ultimately, the most painful thing would be if we were to fail to deal with it. Ultimately, we’d have to go through a much deeper downturn … The one thing we really cannot do is fail to restore price stability. The economy doesn’t work for anyone unless you do that.”

Stocks Up Today Following Five Weeks in the Red

Financial markets have been in panic mode for months amid impending interest rate hikes and rampant inflation. Spring in particular has been disastrous for investors, as the S&P and Nasdaq Composite logged five consecutive weeks in the red as fears over worsening market conditions bubbled over. Today’s jump may prove the sole bright spot in an otherwise tumultuous past week for stocks. However, the S&P is still down slightly from Monday. This will mark the sixth straight week of declines — the worst since June 2011.

Russia’s invasion of Ukraine has seemingly only added to Powell’s concerns, as war generally acts as an inflationary force. Add on the supply constraints created from sanctions against Russia, and it’s not exactly a surprise that investors are showing some sheepishness in the markets the past few weeks.

It’s not just stocks, however. Cryptocurrencies have been a major casualty of the bearish market lately, shedding hundreds of billions in market capitalization over the past few weeks. The no. 1 crypto by market cap, Bitcoin (BTC-USD), dropped below the all-important $30,000 resistance level this week as part of a crypto-wide selloff, even briefly dipping as low as $26,000 per coin. This comes just months after BTC hit a new all time high of $67,000 this past November, as investors hoped the coin could act as a solid inflation hedge.

Fortunately, today’s upswing has been quite inclusive. Even crypto is mostly in the green. Bitcoin is up about 4.5% over the past 24 hours, currently trending around $30,o00 per coin at the time of writing.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.


Article printed from InvestorPlace Media, https://investorplace.com/2022/05/why-are-stocks-up-today-2/.

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