Stocks jump, with Wall Street on track for rare winning week

Stocks are continuing to climb after a rally Thursday on Wall Street, with U.S. financial markets on track for their first weekly gain after three weeks of punishing losses.

The S&P 500 was up 86 points to 3,882, or 2.3%, as of 11:10 Eastern time, while the Dow Jones Industrial Average rose 627 points, or 2%, to 33,304. The Nasdaq Composite was up 2.4%.

Investors are looking ahead to U.S. inflation data due next week and hoping that the moderation in prices of oil and some other commodities this week is a sign inflation might be abating.

Trading has been turbulent in recent weeks as investors try to determine whether a recession is looming. The S&P 500 has fallen for 10 of the last 11 weeks and is down 18.5% on the year.

With inflation at a 40-year high, Americans are increasingly worried about the economy. About 6 in 10 are concerned that a major recession is "right around the corner," according to a May survey from AllianzLife.

Some analysts remain steadfast in predicting that any impending economic downturn will fall short of a recession.

"With household and corporate balance sheets strong and little sign of the kinds of credit binges or asset price bubbles that have usually preceded past downturns, we continue to think a sharp slowdown is more likely than a recession," Andrew Hunter, senior U.S. economist at Capital Economics, said in a note to investors.

But several major investment banks, including Goldman Sachs and Citigroup, this week said the odds of the U.S. entering a recession within the next year are growing.

"We will soon find out if the inflation trade is pausing or cracking. Pain levels are raising with the 'recession rotation' in full swing as the narrative shifts from supply-chain concerns to demand destruction," Stephen Innes of SPI Asset Management said in a commentary.

Trading Thursday on Wall Street was dominated by another round of testimony before Congress by Federal Reserve Chair Jerome Powell, who told a House committee the Fed hopes to rein in the worst inflation in four decades without knocking the economy into a recession. But he acknowledged "that path has gotten more and more challenging."

Although the jobs market remains healthy, some discouraging signals are cropping up.

After falling to a 50-year low of 166,000 in late March, weekly jobless claims now hover between 200,000 and 250,000 a week — roughly where they were before the pandemic. While hiring remains robust, with employers adding 390,000 jobs in May, turmoil in financial markets along with the Fed's aggressive rate hikes have led to a pullback in some sectors of the economy, with tech startups in particular freezing hiring plans and cutting staff.

Investors are also watching for signs that the highest inflation in 40 years will chill consumer spending. Data shows many Americans shifting spending from big-ticket items like electronics to necessities. The pressure has been worsened by record-high gasoline prices.

Early Friday, U.S. benchmark crude oil was up 81 cents at $105.08 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the basis for pricing for international trading, picked up 60 cents to $107.06 per barrel.

The yield on the two-year Treasury, which tends to move with expectations for the Fed's actions, has dropped back to 3.08% from more than 3.40% in the middle of last week, though it rose Friday.

The yield on the 10-year Treasury, which sets the bedrock of the world's financial system, rose to 3.09% on Friday from 3.07% late Thursday. But it's also moderated after coming close to 3.50% last week.