It follows a manic week that began with Japanese stocks falling to their worst loss since 1987’s Black Monday, only for US stocks to soar later to their best day since 2022 on Friday.

The gains pulled the S&P 500 back within 5.7 per cent of its all-time high set last month, after it had sunk nearly 10 per cent below that record during the week. It was a vicious return of volatility for a market that had been rising smoothly, and a measure of fear on Wall Street briefly surged toward its highest level since the 2020 COVID crash. It also may not be over. Worries are still high about the strength of the US economy, and reports are due next week on inflation, sales at retailers and other measures of strength.

But on Friday, at least, the mood was one of calm after more big US companies joined the pile reporting better profit for the spring than analysts expected.

Weighing on the market have been worries about the slowing US economy. A raft of weaker-than-expected reports forced questions about whether the Federal Reserve has kept interest rates at too high of an economy-crunching level for too long in order to beat inflation. A report last Friday showing much weaker hiring by US employers than expected was the lowlight.

Such worries dragged Treasury yields lower in the bond market, and they fell again Friday. Yields sank as investors looked for safer places for their money and as expectations built for deeper cuts to rates coming from the Fed. The yield on the 10-year Treasury fell to 3.94 per cent from 3.99 per cent late Thursday.

Reports this week could drive more swings for the market. On Thursday will come an update on how much shoppers are spending at US retailers. Households at the lower end of the income spectrum have been struggling for a while to keep up with still-rising prices, but economists expect the report to show a return to growth after a stall in retail spending during June.

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Another report on Thursday will show how many US workers are applying for unemployment benefits. The most recent such report raised hopes for the economy after the prior week’s frightened investors.

Looming over them all will be the latest updates on inflation. A worst-case scenario would be if Tuesday’s and Wednesday’s inflation reports show higher-than-expected rises in prices at the wholesale and consumer levels, while the week’s other reports show a sharp weakening of the economy.

with AP