NEW YORK: Wall Street stocks finished higher following another volatile session yesterday as investors assess how rising recession risk affects the outlook for oil prices and monetary policy.

Equities overcame a midday sag as Federal Reserve (Fed) chair Jerome Powell, in a second day of testimony on Capitol Hill, downplayed the idea that government pandemic aid was the key factor fueling US inflation as he continued to vow a tough response to inflation.

But Karl Haeling of LBBW said markets have “significantly shifted rate hike expectations” over the last week as recession chatter has grown. Investors now anticipate the United States will be essentially finished with rate increases in 2022 rather than in 2023.

“That leaves a big decision for equities,” Haeling said. “Do you sell off because the economy is going into a recession, or do you rally because the scope of the rate hikes is going to be less and faster than you thought it was going to be?”

The Dow Jones Industrial Average ended up 0.6% at 30,677.36.

The broad-based S&P 500 gained 1.0% to finish at 3,795.73, while the tech-rich Nasdaq Composite Index advanced 1.6% to 11,232.19.

Stocks are in positive territory for the week in a shift from the dreary trend this year that has seen equities slump as inflation and tightening monetary policy dominate discussion. – AFP