After a tumultuous week, Wall Street ended on a high note Friday as US Treasury yields fell and investors were encouraged by economic data despite mounting concerns that the Federal Reserve will have to maintain its restrictive policy through the end of the year.
The Nasdaq, which is heavily weighted by technology companies, gained nearly 2% thanks to interest rate sensitive megacaps, while the S&P 500 and Dow Jones Industrial Average each gained over 1%. United States Treasury yields decreased after remarks from Federal Reserve officials alleviated concerns about inflation and interest rates.
“It continues to be all about the Fed and how gracefully they can slow the economy,” said David Carter, managing director of JPMorgan Private Bank in New York. While giving markets what they want to hear, the Fed is also injecting caution by suggesting that interest rates may need to rise depending on economic data.
In addition, this week saw the widely followed technical levels of the 50-day and 200-day moving averages for the S&P 500 index be breached.
It’s a sign of change, according to Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. It’s true that many people have their doubts, but they’re reluctant to be the last ones standing because they fear being left behind.
Purchasing managers’ indexes (PMI) from the Institute for Supply Management and S&P Global show that activity in the sector continues to expand despite a cooling of input prices, which was reported in economic data released on Friday.
It’s a sign of change, according to Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. And many people are sceptical, but they don’t want to be left behind.
Purchasing managers’ indexes (PMI) from the Institute for Supply Management and S&P Global show that activity in the sector continues to expand despite a cooling of input prices, suggesting that the steady demand for services reported on Friday is continuing.
ISM data showed “basically healthy growth with slowing prices,” which is exactly what investors were hoping to see, Carter noted. If they are less anxious about landing, it’s a good sign that they want to stay on the plane.
The Dow Jones Industrial Average increased 387.4 points, or 1.17 percent, to 33,390.97; the S&P 500 rose 64.29 points, or 1.61 percent, to 4,045.64; and the Nasdaq Composite increased 226.02 points, or 1.97 percent, to 11,689.01.
The session ended with gains for all 11 of the S&P 500’s major sectors; technology and consumer discretionary posted the largest percentage increases.
All but seven of the S&P 500 have reported their earnings for the fourth quarter, marking the home stretch for earnings season. According to Refinitiv, quarterly results have topped expectations 68% of the time.
Overall, analysts predict a decline in S&P 500 earnings of 3.2% from the same period last year, and they forecast further declines in the first two quarters of 2023. According to Refinitiv, this would mean that the S&P 500 entered a three-quarter earnings recession in the latter part of 2022.
The share price of Apple Inc (AAPL.O) rose 3.5% after Morgan Stanley predicted a 20% gain in value due to rumours of a hardware subscription. Shares of Broadcom Inc (AVGO.O) rose 5.7% after the chipmaker projected higher-than-expected revenue for the second quarter due to rising demand for AI-related chips.
Costco Wholesale Corp (COST.O) was among the decliners, falling 2.1% after reporting a revenue shortfall due to the impact of high inflation on consumer spending.
After reporting a quarterly loss and lowering its revenue forecast, shares of chipmaker Marvell Technology Inc (MRVL.O) fell 4.7%. On the NYSE, advancing issues outnumbered declining ones by a ratio of 4.54 to 1, while on the Nasdaq, the ratio was 2.36 to 1.
On the S&P 500, there were 23 new 52-week highs and 2 new lows, while on the Nasdaq Composite, there were 79 new highs and 57 new lows. Compared to the 20-day moving average of 11.10 billion shares traded on U.S. exchanges, volume was lower at 10.83 billion shares.