Wall Street’s main indexes gained on Friday as investors assessed Federal Reserve Chair Jerome Powell’s hawkish commentary and looked forward to key economic data next week for more cues on the monetary policy path.
Powell on Thursday said central bank officials “are not confident” that interest rates are yet high enough to finish the battle with inflation and would not hesitate to tighten policy further if needed.
The hawkish comments ended the S&P 500 and the Nasdaq’s longest winning streak in two years, which had been driven by expectations that the Fed was done with its hiking cycle after the central bank kept rates unchanged at its last meeting.
“The comments yesterday were such that the theme of ‘higher for longer’ is more likely to manifest. That’s the downside,” said Greg Bassuk, chief executive officer at AXS Investments.
“On the positive side, investors have seen strong earnings and a resilient economy. So all eyes are focused on any other economic data or Fed comments that could give better feedback regarding the direction of both the economy and the markets going forward.”
Supporting equities on Friday, the yield on the benchmark 10-year Treasury note eased to 4.6043%.
Megacap growth stocks traded higher, with Nvidia, Tesla and Apple up between 0.5% and 1.4%.
Information technology, up 0.9% led sectoral gains, with nine out off 11 major S&P 500 sectors on the upside.
Traders are now pricing in an about 68% chance of a rate cut by the Fed at the June meeting, compared with bets of a cut in May before Powell spoke, according to the CME Group’s FedWatch tool.
While this week has been light in terms of economic data, investors will get reports on consumer and producer prices as well as retail sales next week, which will further shape interest rate expectations ahead of the Fed’s December meeting.
At 10:02 a.m. ET, the Dow Jones Industrial Average was up 50.32 points, or 0.15%, at 33,942.26, the S&P 500 was up 12.72 points, or 0.29%, at 4,360.07, and the Nasdaq Composite was up 74.72 points, or 0.55%, at 13,596.17.
Among other stocks, gaming software maker Unity Software fell 2.7% on missing third-quarter revenue estimates.
Plug Power plunged 34.1% after the hydrogen fuelcell maker raised going concern doubts.
Illumina shares dropped 14.1% as the gene-testing company trimmed its full-year profit forecast for the second straight quarter.
The S&P 500 health sub-index fell 0.6%.
Advancing issues outnumbered decliners by a 1.74-to-1 ratio on the NYSE and by a 1.16-to-1 ratio on the Nasdaq.
The S&P index recorded 14 new 52-week highs and lows, while the Nasdaq recorded 24 new highs and 171 new lows.
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