Wall Street closed sharply higher, posting weekly gains as Treasury yields slipped

NEW YORK (Reuters) – Wall Street rose on Friday to cap a volatile week, as U.S. Treasury yields fell and economic data helped investors navigate the growing possibility that the Federal Reserve will be forced to keep its policy tightening late. in the year.

All three major US stock indexes rose more than 1%, with the technology-heavy Nasdaq up nearly 2% supported by large interest rate-sensitive companies. US Treasury yields fell in the wake of comments from Federal Reserve officials that calmed concerns about inflation and interest rates.

“It’s still all about the Fed and how gracefully it can slow the economy,” said David Carter, managing director at JPMorgan Private Bank in New York. “The Fed is telling the markets what they want to hear, but also injecting caution that interest rates may need to rise depending on the economic data.”

Throughout the week, indices made gains, with the S&P snapping a three-week losing streak and the Dow returning to positive territory year-to-date, enjoying its first weekly advance since late January.

The week also saw the S&P 500 break out of its 50- and 200-day moving averages, which are two closely watched technical levels.

“It’s a sign that a shift is happening,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “And a lot of people suspect that, but they don’t want to be left behind.”

Economic data released on Friday showed steady demand for services, with purchasing managers’ indices (PMI) from the Institute for Supply Management and Standard & Poor’s Global indicating that activity in the sector continues to expand even as input prices fall.

“Investors saw what they wanted in the ISM data, which was basically healthy growth as prices slowed,” Carter added. This indicates that they are willing to stay on the plane because they are less worried about landing.

The Dow Jones Industrial Average rose 387.4 points, or 1.17%, to 33,390.97 points, the Standard & Poor’s 500 rose 64.29 points, or 1.61%, to 4,045.64 points, and the Nasdaq Composite Index rose 226.02 points, or 1.97%, to 11,689.01.

All 11 major sectors of the S&P 500 ended the session in the green, with technology (.SPLRCT) and consumer appreciation (.SPLRCD) notching the largest percentage gains.

Fourth-quarter earnings season has come to a close, with all but seven companies in the S&P 500 reporting earnings. Results for the quarter beat consensus estimates 68% of the time, according to Refinitiv.

On the whole, however, analysts believe that the S&P 500’s earnings will decline 3.2% in the fourth quarter compared to a year ago, and they expect negative numbers on an annual basis for the first two quarters of 2023. This means that the S&P 500 has entered an earnings slump three quarters in the past months. The last of 2022, according to Refinitiv.

Apple Inc (AAPL.O) stock jumped 3.5% after Morgan Stanley said the stock could rise more than 20% this year on the back of a potential hardware subscription.

Broadcom Inc (AVGO.O) advanced 5.7% after the chipmaker forecast second-quarter revenue higher than analyst estimates as increased investments in artificial intelligence fueled demand for chips.

Among the losers, Costco Wholesale Corp (COST.O) fell 2.1% in the wake of its revenue loss, as high inflation dampened consumer demand.

Chipmaker Marvell Technology Inc (MRVL.O) fell 4.7% in the wake of the company’s quarterly earnings loss and disappointing revenue forecast.

Advance issues outnumbered declining issues on the NYSE by a ratio of 4.54 to 1; On the Nasdaq, a ratio of 2.36 to 1 favored advanced traders.

The S&P 500 posted 23 new 52-week highs and two new lows; The Nasdaq index posted 79 new highs and 57 new lows.

Trading volume on US stock exchanges reached 10.83 billion shares, compared to an average of 11.10 billion over the last 20 trading days.

Reporting by Stephen Kolb. Additional reporting by Sruthi Shankar in Bengaluru. Editing by Cynthia Osterman

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