The S&P 500 ended the day 1.9 percent higher, but remained down about 1 percent for the week. The tech-heavy Nasdaq Composite gained 1.8%, but was down 1.6% for the week. Europe’s Stoxx 600 stock index closed 1.8% higher. International benchmark Brent crude, which on Thursday fell to levels last seen before Russia’s invasion of Ukraine, added 2.1 percent to $101.16 a barrel. There was little reaction in late afternoon trade to US President Joe Biden’s speech during his trip to Saudi Arabia. Data on Friday showed U.S. retail sales rose 1 percent month-on-month in June, beating economists’ forecasts for a 0.8 percent rise. Separately, the closely watched University of Michigan Consumer Sentiment Index showed medium-term inflation expectations had fallen to a one-year low of 2.8 percent. Markets in recent months have been engulfed in debate over whether the U.S. economy is strong enough to withstand aggressive rate hikes by the Federal Reserve in response to red-hot inflation, after pessimistic business surveys weighed on the outlook. The S&P is more than 19% lower for the year. “The consumer is still spending, they’re still confident, there’s still limited demand,” said Ron Temple, head of US equities at Lazard. He warned, however, that this could confirm the US central bank’s determination to tighten monetary policy, with retail sales numbers showing that “rate hikes so far have had no effect” in dampening demand. Futures markets point to the Fed raising its key funds rate to around 3.5% by February, from a range of 1.5% to 1.75% currently. US consumer prices rose at an unexpectedly brisk annual rate of 9.1 percent in June. A weak report on Chinese gross domestic product also sparked some gains on Friday, prompting speculation that Beijing will release hundreds of billions of dollars of additional stimulus funds to boost growth. The world’s second-largest economy grew 0.4 percent year-on-year in the quarter to the end of June, below the 1.2 percent economists had forecast and from 4.8 percent in the first quarter. “We believe these kinds of numbers will strengthen [the Chinese government’s] determination to drive more stimulus for the rest of the year and that matters globally as well,” said Hani Redha, multi-asset fund manager at PineBridge Investments. Hong Kong’s Hang Seng Index fell 2.2 percent on Friday, however, taking it down 6.6 percent for the week in its biggest weekly drop since March 2020. In US Treasury markets, the yield on the benchmark 10-year note was 0.03 percentage points lower at 2.93%. That yield, which underpins debt prices globally, has fallen from about 3.5 percent a month ago as recession fears have fueled demand for low-risk government bonds. Bond yields fall as prices rise. The yield on the two-year note traded at 3.12 percent in a so-called inverted yield curve pattern that has historically preceded recessions. Despite falling 0.4 percent on Friday, the dollar index, which measures the U.S. currency against six others, rose for a third straight week of gains as the growing specter of recession pushed investors into the safe haven. The euro rose 0.6 percent to $1.008, having fallen below $1 earlier this week for the first time in 20 years.
