Stock Market Rises After Weekly Loss

US stocks rose on Monday, at least temporarily changing direction after more than two months of volatility and losses.

The S&P 500 climbed 0.7% in morning trading, while the Dow Jones Industrial Average rose 0.4%. The technology-focused Nasdaq Composite Index was 0.8% higher. The three indexes fell Friday after data showed hiring growth slowed in May, though employers still added a strong 390,000 jobs.

Investors are still trying to balance the positive signs from the jobs report against more cautious recent economic commentary from executives like Tesla’s Elon Musk and JP Morgan’s Jamie Dimon, said AvaTrade chief market analyst Naeem Aslam.

On top of the jobs market, investors are also watching economic data closely for clues about the Federal Reserve’s path for raising interest rates. Fears that the Fed could aggressively raise rates and potentially drive the economy into recession have stoked volatility in global markets this year.

While traders and consumers alike are looking for signs that inflation has peaked, the real issue is when inflation will come down to a more neutral rate and how much the Fed and other central banks will have to raise interest rates to get it there, said Siddharth Singahi, chief investment officer at IronHold Capital.

A key test for markets will be Friday’s US consumer-price index. The closely watched inflation gauge is expected to rise 8.2% in May from a year earlier, according to economists surveyed by The Wall Street Journal. Excluding food and energy, price growth is expected to cool slightly to an annual rate of 5.9% in May from 6.2% the previous month.

Fed officials have indicated they plan to raise interest rates by half a percentage point at next week’s policy meeting, and by the same amount again in July. If they need to do more, Mr. Singahi said, he believes they will, no matter the market reaction.

“Until that’s resolved, not much is going to change for the market fundamentally,” he said.

Trading has been quieter in recent weeks as investors gear up for coming central bank decisions and crucial economic data. The Dow industrials fell 0.9% last week, the smallest weekly change for that index in about a month. The S&P 500 lost 1.2% last week while the Nasdaq ended down 1%.

“We seem to be in a kind of wait-and-see mode,” said Craig Erlam, senior market analyst at Oanda in London. “We’ve entered a phase where a lot of interest-rate increases are priced in. A lot of growth slowdown is priced in. We are still seeing intraday volatility, but it does seem to have stabilized.”

Amid a record hiring streak in the US, economists are watching for signs of a possible wave turn. WSJ’s Anna Hirtenstein looks at how rising interest rates over high inflation, market selloffs and recession risks challenge the growth of America’s workforce. Photo: Olivier Douliery/AFP

Shares of Spirit Airlines rose 6.1% after JetBlue Airways sweetened its offer to buy the company. JetBlue in May launched a hostile takeover of Spirit, which had already agreed to a merger with Frontier Airlines.

Spirit’s shareholders are set to vote on the Frontier merger proposal on Friday. Shares of JetBlue rose 2%, while Frontier Group shares rose 2.6%.

Tesla shares rose 1.3%, partially recovering from a 9.2% fall on Friday after Mr. Musk, its chief executive, said the electric vehicle maker would cut 10% of its salaried workforce, citing concerns about the global economy. Mr. Musk on Monday threatened to terminate his deal to buy Twitter Inc.,

shares of which fell 3.7%.

Amazon.com shares rose 2.9% to $127.12. Monday will mark the first day of trading since the company executed a 20-for-1 stock split. Before the split, Amazon shares were $2,447 a share.

Shares of Keurig Dr Pepper rose 4.4%, while VICI Properties rose 4.7% and ON Semiconductor rose 5.3% after S&P Dow Jones Indices said the three companies will join the benchmark S&P 500 index this month.

US crude oil slide 0.3% to $118.45 a barrel. Prices for oil have surged this year as Russia’s war in Ukraine has disrupted global commodity markets. The average price of regular gas in the US rose to $4.86 over the weekend, according to AAA.

In the bond market, the yield on 10-year US Treasurys jumped to 3.028%, from 2.940% Friday, as investors sold government bonds. Yields and bond prices move inversely. Bond yields have been on the rise in recent weeks but remain below their recent high of 3.124% set in early May.

Traders worked on the floor of the New York Stock Exchange on Friday.


Photo:

BRENDAN MCDERMID/REUTERS

Overseas, the British pound rose 0.4% against the US dollar to $1.2539 as Prime Minister Boris Johnson is set to face a vote of confidence in his leadership on Monday. Mr. Johnson’s poll ratings have fallen amid revelations that he held parties in Downing Street during Covid-19 lockdowns.

The UK’s FTSE 100 rose 1.4% after being closed since Wednesday due to the four-day Platinum Jubilee weekend, celebrating Queen Elizabeth II’s 70 years on the throne.

The pan-continental Stoxx Europe 600 rose 1.2%. Investors in Europe will be watching the European Central Bank’s policy meeting on Thursday, where it is expected to lay out its plans for unwinding bond purchases and raising interest rates. The ECB is expected to raise rates for the first time in 11 years in July as it seeks to contain surging inflation.

Asian markets rallied as China continued to ease Covid-19 restrictions in major cities. China’s Shanghai Composite rose 1.3% while Hong Kong’s Hang Seng Index gained 2.7%. Japan’s Nikkei 225 pink 0.6%.

Write to Chelsey Dulaney at chelsey.dulaney@wsj.com and Paul Vigna at Paul.Vigna@wsj.com

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