US stocks rebounded this week from a rout that drove the market down for three straight weeks after recent comments from the Federal Reserve officials buoyed sentiment and reading on inflation expectations eased.
the S&P 500 gained more than 3% Friday, the most since May 2020. it closed the week up 6.5%, clocking in its best week in nearly a month. a rally in treasuries waned on Friday, but the policy-sensitive us two-year yield still recorded its biggest weekly drop since mid-May.
While traders struggled to make sense of a deluge of data this week, mood brightened on Friday after the university of Michigan's measure of longer-term consumer inflation expectations decreased from an initially reported 14-year high, thereby lessening the need for more drastic rate increases. James Bullard, head of the St. Louis Fed, also soothed investors by saying that concerns about a US recession are exaggerated. In testimony to legislators this week, Fed Chair Jerome Powell reaffirmed his commitment to containing inflation, but some traders took comfort in his remarks as a sign that the central bank will take the possibility of a recession into account as it works to do so.
Elsewhere, bitcoin rose, hovering around $21,000. the dollar fell. WTI crude rose after retreating over the previous two sessions. sliding raw materials prices have contributed to a moderation in market-based measures of inflation expectations.
As the residential real estate market responds to higher borrowing costs and still-high prices, new house sales in the US increased in May, indicating rises in the west and south and breaking a months-long slump. The increase in sales could be attributed to some consumers locking up their mortgage rate ahead of potentially much higher borrowing expenses.