Stocks rose on Friday in response to a fresh round of bank earnings and promising economic data on worries the Federal Reserve will raise interest rates by 100 basis points to blunt rising inflation. .
Dow Jones Industrial Average up 658.09 points, equivalent to 2.15%, reaching 31,288.26. The S&P 500 rose 1.92% to 3,863.16 and the Nasdaq Composite gained 1.79% to 11,452.42.
Despite Friday’s rally, all major averages closed the week with losses. The Dow fell nearly 0.2% while the S&P and Nasdaq fell 0.9% and nearly 1.6%, respectively. The intraday moves have sent the S&P 500 index down about 19% from its peak.
“The market is slowly starting to believe that the Fed will probably not raise rates at all by the end of the month and that we are about to see a peak in Fed tightening that will be priced into the market.” Edward Moya, a senior analyst at OANDA said. It’s “bringing some relief to investors scaling back stocks.”
A new round of banking results from Wells Fargo and Citigroup provides more insight into the state of the economy. Wells Fargo increased by about 6.2% even as quarterly profits fell 48% and banks set aside funds for bad debts. Citigroup up 13.2% because it beats estimates and benefits from an environment of rising rates.
A day earlier, investors had scrutinized worrisome reports from JPMorgan Chase and Morgan Stanley, which were the start of big bank earnings. Investors also weighed the possibility of a larger rate hike from the Federal Reserve and fears of a recession.
Along with fresh bank earnings, traders analyzed strong preliminary consumer sentiment data and retail sales beat expectations. Those numbers seem to assuage concerns that the Fed will raise 100 basis points at upcoming policy meetings and indicate that consumers boost retail spending even as inflation hits record high.
Meanwhile, comments from Atlanta Fed President Raphael Bostic on Friday indicated that he would likely not favor a potential interest rate move higher. He warned that rapidly rising rates could “undermine a lot of things that are working well.”
“The market seems to be welcoming this news, although retail strength may only add fuel to the fire for the Fed to continue its battle,” said Mike Loewengart, managing director of investment strategy at Morgan Stanley’s E-. interest rate hikes to cool the economy and tame inflation” Commercial Capital Management, noting that the numbers are not adjusted for inflation.
Friday’s results prompted a broad-based rally across the S&P 500, with all major sectors ending the session in positive territory. Financials rose 3.5% on strong bank shares while the healthcare sector gained about 2.5% following strong earnings results from UnitedHealth. Consumer staples marked the only industry to close for the week slightly higher.
Vandalized tech stocks also spiked on Friday. Meta Platforms, Salesforce, and Amazon grew 4.2%, 3.9%, and 2.6%, respectively. Netflix rose 8.2%. UnitedHealth, JPMorgan Chase and American Express led the Dow’s recovery, gaining about 5.4%, 4.6% and 4.4%, respectively.
In other news, Pinterest To share increased by nearly 16.2% after the report of the Wall Street Journal said activist investor Elliott Management already holds more than 9% stake in the social media company.
