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US stocks saw a rebound on Friday after a recent sell-off triggered by a hawkish message from the Federal Reserve.
The S&P 500 closed 1.1 per cent higher, recovering from early declines.
The Fed’s decision to scale back expected interest rate cuts next year due to high inflation caused turmoil in the equity markets earlier in the week. However, with inflation figures coming in slightly lower than anticipated at 2.4 per cent for November, some concerns were alleviated.
“People felt we’d bottomed, then we got a couple of positive catalysts,” said Michael O’Rourke, chief markets strategist at broker JonesTrading, referring to the inflation data and optimism surrounding a potential government shutdown deal.
Despite the recent pullback, the S&P remains 24 per cent higher for the year, although it is below levels seen earlier in December.
Barclays strategist Emmanuel Cau described the recent market correction as a “reality check” following frenzied buying of speculative assets such as bitcoin post the US election.
Ten-year Treasury yields fell to 4.51 per cent on Friday after reaching a six-month high earlier in the week.
The debate within the Fed over interest rates was highlighted by comments from Cleveland Fed president Beth Hammack and New York Fed president John Williams.
While Wall Street experienced a positive bounce on Friday, European stocks did not fare as well, with the Stoxx Europe 600 closing down 0.9 per cent.
Trump’s message on his Truth Social platform added to the cautious mood in Europe, warning the EU about potential tariffs on oil and gas.