U.S. stocks rose on Wednesday morning after a bearish trend that began as investors weighed the possibility of an economic recession against higher interest rates and optimism about easing of COVID protocols in China.
The S&P 500 (^GSPC) was up 0.2% at the open, while the Dow Jones Industrial Average (^DJI) was up a modest 0.1%. The tech-heavy Nasdaq Composite (^IXIC) advanced by about the same margin.
In commodity markets, oil traded near $74 a barrel this week after falling nearly 10% to its lowest level since January.
“Fears are growing that economies are in for a tough time ahead as raging inflation and the bitter interest drug used to bring it down take effect,” Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said in a morning note. Recession warnings from US bank chiefs and gloomy trade data from China. “Despite the easing of restrictions today, it is clear that China’s Covid nightmare is not over.”
Dovish comments from Wall Street leaders on Tuesday weighed on already subdued sentiment this week as many expressed concerns about inflation and high interest rates for US consumers.
JPMorgan Chief Executive Jamie Dimon said Americans already have $1.5 trillion in savings in their bank accounts being eroded by rising prices, while ending disposable cash “could disrupt the economy and lead to this soft or hard recession that people are worried about.” warned. Bank of America CEO Brian Moynihan echoed a similar message, saying that while consumers are still spending, the pace is beginning to slow.
Meanwhile, Goldman Sachs ( GS ) CEO David Solomon predicted a barrel decline for stocks in 2023, putting the probability of a soft decline at just 35% — contradicting the investment bank’s in-house economists. It predicts that the US will narrowly avoid recession next year.
“There’s a very reasonable possibility that we could have some kind of recession,” Solomon said in an interview at the Wall Street Journal’s CEO Summit on Wednesday afternoon.
Reports that the Chinese government will relax some of its zero-tolerance COVID rules appeared to hurt investors who eased restrictions against economic data outside the country that showed a drop in imports and exports in November.
US shares of Campbell Soup ( CPB ) rose nearly 5% after the canned goods maker reported earnings that beat Wall Street estimates and raised its full-year forecast. The company said U.S. soup sales rose 11% due to increased demand for ready-to-serve soups, condensed soups and broths, reflecting a recent shift among consumers toward valuing food purchases as inflation continues to weigh on households.
Shares of Apple ( AAPL ) were little changed in pre-market losses a day after Bloomberg News reported the iPhone maker scaled back ambitious self-driving plans for its future electric car and delayed the car’s release date to 2026. Bloomberg also reported. On Wednesday morning, mobile industry leader Murata Manufacturing expects Apple to further reduce production plans for the iPhone 14 due to weaker demand.
Investors are awaiting further economic data as the Federal Reserve’s final rate-setting meeting for the year approaches. Weekly jobless claims, producer price inflation and consumer sentiment readings will be released later this week, but the most important data point for the Fed’s interest rate cues is the US Consumer Price Index (CPI), which is released on Tuesday, the same day. central bank officials begin their last two-day rate-setting meeting of 2022.
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Alexandra Semenova is a correspondent for Yahoo Finance. Follow him on Twitter @alexandraandnyc
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