Stocks trim their weekly losses with Friday’s gains

US stocks closed higher on Friday after a grueling week of losses across the major indexes.

Traders welcomed the delay from a tough sell-off in the spring that left no corner of the market unscathed. This week brought several shocks to the market. The data showed that inflation is still rising, disappointing investors. Cryptocurrencies fainted after the so-called stablecoin unexpectedly crashed. The S&P 500 on Thursday dealt with bear market territory, 20% below its recent high, and the Dow Jones Industrial Average posted weekly losses for the seventh consecutive week, its longest losing streak in more than 20 years.

The Nasdaq Composite is up 3.8% as of 4pm ET, while the S&P 500 is up 2.4% and the Dow Industrial Index is up 466 points, or 1.5%. All three indices are down from the highs seen earlier in the session.

The moves to the upside came after a rally late in the Thursday session helped the Nasdaq Composite to gain. Risk sentiment has been trading in international stock markets overnight. By Friday morning in the US, investors were collecting stocks of shabby tech companies before the opening bell.

However, traders and investors were unwilling to get to the bottom.

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“Is this week going to be this year’s low? I doubt that,” said Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management. “I wouldn’t be surprised if we felt a deeper kind of growth sometime this summer.”

Investors are currently facing issues not seen in decades as inflation continues to hover near a four-decade high. Many traders believe that a growing recession is likely as the Federal Reserve tries to control pricing pressures. Many institutional and individual investors alike are beginning to dismiss the idea that the Fed can engineer a so-called soft landing, during which inflation declines while unemployment remains low and the economy continues to grow.

Mr. Slimmon said he thinks there is more short-term pain in store, and remains optimistic about the long-term, and said he thinks the market will rebound by the end of the year, citing some somewhat upbeat earnings reports. More than three-quarters of S&P 500 companies reported a positive surprise in first-quarter earnings per share, in line with previous quarters, according to FactSet.

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“I spend a lot of time talking to companies and listening to company conference conferences, and what I can say is that I don’t collectively hear about the corporate weakness that I see in the stock market,” El-Sayed said. Solomon said.

On Thursday, Federal Reserve Chairman Jerome Powell acknowledged that controlling inflation could take a short-term blow to the economy, saying on a Marketplace radio show that “the process of bringing inflation down to 2% will also involve some pain.”

He reiterated his view that additional increases of half a percentage point would likely be appropriate in future meetings, but said the central bank might consider larger increases if economic data warranted such steps.

This week’s inflation report offered few solutions to investors, especially after data showed that price pressures were quite broad-based. Even as gasoline prices fell, so did the prices of groceries, as well as dining out, air travel and other services, alarming investors who had hoped inflation had peaked.

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This has forced many to sell riskier investments and pile them into assets that are seen as safer. Growth and technology stocks, which tend to be hurt by rising interest rates, in particular, are off. But risk-aversion sentiment has spread elsewhere, leading to a sharp drop in cryptocurrencies as well.

“This week has been a pivotal point in the markets. The mood has changed from assessing whether we can live in an economy at higher rates to [investors] He asked, “Are we on the verge of a recession?” said Florian Ilbo, head of macro at Lombard Odier Investment Managers.

But on Friday, technology stocks were among those that led the recovery. Nvidia added 9.5%, PayPal added 6.1% and Netflix added 7.65%. The IT segment of the S&P 500 recently increased by 3.45%.

Twitter shares fell 9.7% after Tesla CEO Elon Musk tweeted that his deal to buy the social media company was deemed private “temporarily on hold” with pending details about the amount of fake accounts on the social media platform. Mr. Musk later tweeted that he was committed to the acquisition, which helped Twitter cut its pre-marketing losses by more than 20%. Tesla shares recently rose 5.7%.

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“While I expect the deal to close, we need to prepare for all scenarios,” Twitter CEO Parag Agrawal said Friday, a day after announcing internally about a hiring freeze and cost cuts.

Robinhood stock is up 25% after Sam Bankman-Fried, founder of crypto exchange FTX, revealed that he had bought a 7.6% stake in the brokerage. Duolingo jumped 34% after the language learning platform reported a sharp jump in revenue and monthly active users.

Energy stocks were among the biggest gainers on Friday, rising alongside oil prices. Brent crude, the global benchmark, rose 3.8 percent to $111.55. Oil prices have fallen this week, but have been up more than 40% since the start of the year.

Bitcoin surged to just over $30K on Friday, from the 5PM ET level of $28572.24 on Thursday. Elsewhere in the crypto markets, the beleaguered stablecoin TerraUSD continued to slide, trading at 11 cents. TerraUSD broke its usual peg to $1 at the end of last week after the token sale spree. Sister token Luna has also fallen sharply this week, trading at half a penny, down from over $60 on Monday.

In the bond market, the yield on the benchmark 10-year US Treasury rose to 2.932% from 2.815% on Thursday, reversing the four-day yield drop that came as investors piled into bonds. Yields rise when bond prices fall.

Overseas stock markets were also trading higher on Friday. In Europe, the Stoxx Europe 600 Continental Index rose 2.1%. In Asia, Hong Kong’s Hang Seng rose 2.7%, while Japan’s Nikkei 225 climbed 2.6%. The Shanghai Composite Index is up 1%.

—Caitlin Ostrov contributed to this article.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Corrie Driebusch at corrie.driebusch@dowjones.com

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