US stocks rise, shrugging off gloomy World Bank outlook

Traders work on the floor of the New York Stock Exchange, on June 7, 2022. PHOTO: REUTERS

NEW YORK (AFP) - Wall Street stocks finished another volatile session solidly higher on Tuesday (June 7), absorbing a World Bank warning about the global economy as inflation worries remained in focus.

The World Bank cut its global growth estimate to 2.9 per cent, 1.2 percentage points below the January forecast, in the wake of the Russian invasion of Ukraine, which has sent grain and oil prices soaring.

"The risk from stagflation is considerable with potentially destabilising consequences for low and middle income economies," World Bank president David Malpass told reporters.

Meanwhile, Treasury Secretary Janet Yellen cautioned that price pressures will likely continue even as she defended the US administration's economic policies.

Despite these negatives, "some investors are finding stocks attractive now as the US is not likely to enter into a recession this year or next," said Oanda's Edward Moya.

The Dow Jones Industrial Average ended up 0.8 per cent at 33,180.14.

The broad-based S&P 500 gained 1 per cent to finish at 4,160.65, while the tech-rich Nasdaq Composite Index jumped 0.9 per cent to 12,175.23.

Stocks started the day lower following a profit warning from Target.

The big-box chain said it was canceling orders and undertaking heavy markdowns due to excess inventory some of which arrived late because of supply chain problems.

But while Target fell 2.3 per cent, the broader market recovered as investors viewed the downcast statement as consistent with recent earnings from retailers highlighting higher costs.

"I thought it was a little unfair to punish the markets twice for Target," said Jack Ablin, chief investment officer at Cresset Capital.

"There's certainly a lot of uncertainty in terms of data. We're waiting for inflation later this week," Ablin said. "In the meantime, we're going to see a fair amount of turbulence."

The recovery in equities also coincided with a pullback in the yield in the 10-year US Treasury to below 3 per cent.

Among other companies with big moves, Kohl's surged 9.6 per cent after confirming it is in talks to be acquired by Franchise Group.

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