US stocks gain ground, but still head for weekly losses

Traders work on the floor at the New York Stock Exchange in New York, Friday, July 1, 2022. (AP Photo/Seth Wenig, File)

NEW YORK (AP) — Stocks edged higher in morning trading on Wall Street Friday but are still heading for losses for the week after several days of bumpy trading.

The S&P 500 rose 0.3% as of 10:40 a.m. Eastern. The Dow Jones Industrial Average rose 134 points, or 0.4%, to 33,687 and the Nasdaq rose 0.1%.

Small company stocks rose more than the rest of the market. The Russell 2000 rose 1%.

Major indexes are all on track for weekly losses.

Health care and financial companies were among the biggest gainers. UnitedHealth Group rose 2% and Charles Schwab rose 2.4%.

Energy stocks fell along with sliding energy prices. U.S. crude oil fell 3% and Exxon Mobil fell 1.5%.

Retailers made solid gains after several companies reported strong financial results and gave investors encouraging financial forecasts. Discount retailer Ross Stores surged 12.3% and clothing retailer Gap rose 9.5% after beating analysts' expectations. Foot Locker rose 7.7% after raising its profit and revenue forecast for the year.

The solid earnings from retailers cap off a shaky week for Wall Street as investors try to get a better sense of inflation's path and its impact on consumers and businesses. Investors have been particularly anxious about the Federal Reserve's fight against inflation and have been looking for signs that might allow the central bank to shift to less aggressive interest rate increases. That anxiety was heightened on Thursday after a Fed official suggested U.S. interest rates might have to be raised higher than expected to cool inflation.

The central bank has already warned that the main lending rate may have to rise to a more painful level than anybody had anticipated, possibly between 5% and 7%. The Fed’s benchmark rate currently stands at 3.75% to 4%, up from close to zero in March.

The Fed is trying to tame the hottest inflation in decades by making borrowing more difficult and curtailing spending. Several big measures of inflation have shown that prices are easing a bit, but other economic indicators show that consumers remain resilient, as does the jobs market.

The Fed's strategy risks sending the economy into a recession if it hits the brakes too hard on economic growth. The latest mix of inflation and economic data has Wall Street trying to gauge whether the Fed needs to keep pushing along with interest rate increases and whether it can achieve its goal without severely crimping consumer spending or employment.

The U.S. reported this week that retail sales rose 1.3% in October as Americans increases their spending at stores, restaurants, and auto dealers, a sign of consumer resilience as the holiday shopping season begins. That's not to say consumer behavior hasn't been affected by inflation. Major retailers say Americans are holding out for sales, refusing to pay full price, with the cost of gasoline, rent, food and almost everything else much higher than it was last year.

European markets were higher and Asian markets closed mixed overnight.

Bond yields were mostly stable and hovering near multidecade highs. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.80% from 3.77%.

___

Joe McDonald and Matt Ott contributed to this report.