Despite the fact that the US economy fell again, Wall Street maintained the positive streak and closed with gains

Stockbrokers in New York (REUTERS/Brendan McDermid)

Stocks extended gains on Wall Street on Thursday after shaking off an early decline. following a report that the US economy is already in a recession or is on its way.

The index dow jones it rose 1% to 32,523.70 points. The S&P 500 closed 1.2% up, to 4,071.99 points, while the Nasdaq Compositetechnology-rich, rose 1.1% to 12,162.61 points.

The indices fell in the early hours after the Commerce Department reported that the economy shrank from April to June at an annual rate of 0.9 percent.. The latest decline in gross domestic product – the economy’s broadest gauge – came after an annual drop in 1.6% between January and March. Consecutive quarters of falling GDP are an informal, though not definitive, indicator of a recession.

The GDP report for the last quarter pointed to weakness throughout the economy. Consumer spending slowed as Americans bought fewer goods. Business investment fell. Inventories tumbled as companies slowed restocking shelves, knocking 2 percentage points off GDP.

The Federal Reserve has made the slowdown in US economic growth, in order to control the greater inflation of the last 40 years, his goal, raising interest rates, the last time on Wednesday. The latest GDP report, coupled with other recent weak data, may be giving some investors confidence that the central bank will not have to be as aggressive in raising rates in the coming months.

“Sometimes bad news is good”said Megan Horneman, chief investment officer at Verdence Capital Advisors.

The Fed raised its key short-term interest rate in 0.75 percentage points on Wednesday, taking it to the highest level since 2018. The move sparked a broad market rally led by tech stocks that helped give the Nasdaq its biggest gain in more than two years. The major indices are now all on track for a weekly gain, extending Wall Street’s strong rally in July.

In a week packed with corporate earnings reports, lInvestors have focused on what companies are saying about inflation and the impact rising interest rates are having on their businesses and customers.

The markets freaked out Monday after the retail giant walmart warned that its profits are being hit by rising food and gasoline prices, which are forcing shoppers to cut back on more profitable discretionary items such as clothing.

Bond yields fell across the board. The two-year Treasury yield, which tends to move with Fed expectations, fell to 2.88% from 2.98% on Wednesday. The 10-year yield, which influences mortgage rates, fell to 2.69% from 2.74%.

(With information from AP and AFP)

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