NEW YORK: Wall Street advanced on Friday near the close of an up-and-down week, as US Treasury yields eased and economic data helped investors look past the growing likelihood that the Federal Reserve will keep its restrictive policy in place for longer than anticipated.
All three US stock indexes were positive, led by the tech-laden Nasdaq, which was given a solid boost by market leading, interest rate sensitive megacaps. US Treasury yields eased in the wake of comments from Fed officials that calmed fears over inflation and interest rates.
For the week, the indexes appear to be on track to notch gains, with the S&P snapping a three-week losing streak and the Dow enjoying its first weekly gain since late January.
The week also saw the benchmark S&P 500 break through its 50- and 200-day moving averages, two closely watched technical levels.
“You have a market that’s oversold, that traded down to major support levels and it’s above the resistance level of the 50” day moving average, said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “It’s an indication that a shift is transpiring. And a lot of people are suspect of it, but they don’t want to be left behind.” Economic data released on Friday showed steady demand for services, with purchasing managers’ indexes (PMI) from the Institute for Supply Management and S&P Global indicating that activity in the sector continues to expand even as input prices cool.
“Nothing indicates we’re going off a cliff,” Pavlik added. “The employment market is still very strong and the data this morning points to a soft landing.” At 1:56PM ET, the Dow Jones Industrial Average rose 279.29 points, or 0.85%, to 33,282.86, the S&P 500 gained 51.18 points, or 1.29%, to 4,032.53 and the Nasdaq Composite added 189.80 points, or 1.66%, to 11,652.78. Among the 11 major sectors of the S&P 500, all but consumer staples were in positive territory, with communication services and consumer discretionary enjoying the largest percentage gains.
Fourth-quarter earnings season is on the final stretch, with all but seven of the companies in the S&P 500 having reported. Results for the quarter have beaten consensus estimates 68% of the time, according to Refinitiv.
Still, on aggregate, analysts believe S&P 500 earnings will have fallen 3.2% in the fourth quarter compared to the prior year, and expect negative year-on-year numbers for the first two quarters of 2023. This would imply the S&P 500 entered a three-quarter earnings recession in the closing months of 2022, per Refinitiv.
Apple Inc jumped 2.9% after Morgan Stanley said the stock could rally more than 20% this year on a potential hardware subscription.
Broadcom Inc advanced 5.5% after the chipmaker forecast second-quarter revenue above analysts’ estimates as increased investments in AI spurred demand for chips.
Among losers, Costco Wholesale Corp slipped 2.8% on the heels of its revenue miss, as high inflation dampened consumer demand.
Chipmaker Marvell Technology Inc slid 6.3% in the wake of the company’s quarterly profit miss and disappointing revenue forecast.