US stocks end volatile week in the green territory

US stocks closed in positive territory on Friday after a volatile week following the Federal Reserve’s interest rate decision on Wednesday and further pressure in the banking sector. The S&P 500, which fell as much as 1% in early Friday trading, ended up 0.57%. The Dow Jones and technology-heavy Nasdaq did the same, ending the week up 0.4% and 0.3%, respectively. Netflix, which led the S&P 500 on Thursday with the stock surging more than 9%, saw shares settle on Friday, up 2.5%.

The benchmark 10-year Treasury yield fell about 70 basis points to trade near 3.38%. On Wednesday, the Fed raised rates by 25 basis points, bringing the range for the fed funds rate to 4.75%-5%, the highest since October 2007, in addition to suggesting its aggressive rate hiking campaign to quell inflation was winding down.

“The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time,” the Fed said in its policy statement, doing away with language for “ongoing rate increases” in interest rates.

Powell stuck with the Fed’s narrative that there is still a path toward a soft-landing or returning inflation to target without pushing the economy into a recession. However, that path has become narrower because of the pressure on the banking system.

On Friday, St. Louis Fed President James Bullard raised his 2023 interest rate projection to 5.625%. This would outpace the Fed’s latest “dot plot” projections, which suggest rates will continue to tick higher in 2023, but only slightly, with benchmark interest rates seen peaking at 5.1% this year, on par with the Fed’s previous December projection. Despite concerns about inflation and rising interest rates, investors are still optimistic about the future of US stocks.