Markets, still unsettled, lurch between gains and losses

By DAMIAN J. TROISE

Stocks were lurching higher and lower in the early going on Wall Street Friday as markets remain unsettled a day after a wide sell-off brought on by a surprisingly high and troubling reading on inflation.

The S&P 500 bounced between gains and losses several times in the first hour of trading, and was back to the breakeven level at mid-morning.

The bond market stabilized after yields soared a day earlier in response to a government report that consumer prices in January made their biggest climb in 40 years.

The yield on the 10-year Treasury, a benchmark for mortgage rates, slipped to 2.02%. A day earlier, that yield rose sharply and traded above 2% for the first time since 2019, according to Tradeweb.

In other stock trading, the Dow Jones Industrial Average was up 91 points, or 0.3%, to 35,334 and the Nasdaq fell 0.2%.

Major indexes are barely holding on to weekly gains after the sharp slump on Thursday following a discouraging report on inflation.

Inflation has been rising persistently over the last year as the economy recovers from the virus pandemic and demand for goods far outpaces supplies. The Labor Department reported that prices at the consumer level were up 7.5% last month from a year earlier, which is the hottest inflation reading since 1982.

The broader market had been gaining ground earlier in the week, but the latest inflation report prompted a bout of selling that erased most of the week’s gains. Investors are worried about the impact from the Federal Reserve’s plan to raise interest rates to fight rising inflation. Such moves to raise interest rates could rein in inflation, but they would also put downward pressure on all kinds of investments.

Other economies also are feeling the heat of sharp price increases, with some central banks already moving to raise interest rates. Others are holding off. Central banks in Thailand, Indonesia and India opted this week to keep their benchmark rates unchanged.

Traders now see a nearly 60% chance that the Fed will raise short-term interest rates by half a percentage point at its meeting next month, double the traditional move, according to CME Group.

The latest report on inflation reached investors who are already parsing the current round of corporate earnings for details on how companies are continuing to deal with pressure from supply chain problems and higher prices. Many companies, including Chipotle and Kellogg have raised prices to offset the impact.

Investors rewarded several companies on Friday for reporting solid financial results. Expedia rose 2.2% after beating Wall Street’s fourth-quarter profit forecasts. Online real estate marketplace Zillow rose 13.7% after reporting surprisingly strong revenue.

Energy stocks made solid gains as oil prices rose 1.4%. Exxon Mobil rose 1.2%. Those gains were tempered by falling technology stocks. Microsoft fell 1%.