This was the first weekly gain in the main market indices after three straight weeks of losses as new economic data reduced investor expectations of rapid Federal Reserve interest-rate increases.
Closed at 31500.68 after an 823.32-point gain of 2.7 percent, the Dow Jones Industrial Average was the S&P 500’s largest percentage increase in more than two years, rising 116.01 points, or 3.1%, to 3911.74 points at the close of trading today. 11607.62 was the closing price of the Nasdaq Composite Index, which is heavily weighted toward technology.
After the S&P 500 fell into a bear market last week, which is defined as a 20% decline from a recent high, the indexes have recovered. As of this writing, the S&P 500 is down nearly 18 percent from its record closing point in January.
During the week, the Dow industrials rose by 5.4%, while the Nasdaq gained 7.5%. The three indices all made up for the losses they had sustained the week before.
The Federal Reserve’s decision to tighten monetary policy to fight inflation sparked a stock market sell-off earlier this month. It was a strange twist in which bad news was good news that boosted investors’ optimism that the Federal Reserve would turn less hawkish this week, as bargain-hunters rushed in to purchase inexpensive equities.
With economic growth slowing, inflation should follow suit. Luc Filip, SYZ Private Banking’s head of investments, sees this as a good development.
Data published Friday shows the lowest-ever recorded level of consumer sentiment for the University of Michigan’s barometer of consumer sentiment. The American people are getting melancholy as inflation erodes their buying power.
May’s inflation predictions for the next five to ten years were similarly reduced downward to 3.1% from 3.3%, according to the University of Michigan. After the survey’s publication at 10 a.m. ET, experts noted that the adjustment sparked some confidence that the Fed wouldn’t be as aggressive about rising interest rates. In announcing last week’s 0.75 percentage point rate rise, Fed Chairman Jerome Powell noted the survey’s May long-term inflation expectations score.
In other news, the composite purchasing managers’ index for manufacturing and services in the United States sank to a five-month low on Thursday. earlier.
Investors in interest-rate futures markets are predicting a rate reduction by the middle of next year. “Growth may be slowing down sooner than anticipated.” Esty Dwek, chief investment officer at FlowBank, said: “That should enable the Fed to soften at some time.”
Northwestern Mutual Wealth Management’s senior portfolio manager, Matt Stucky, cautioned that this week’s rally does not signify that the market has reached a bottom. For the Fed to stop increasing interest rates, it will need further proof that it is winning the battle against inflation, he added.
Mr. Stucky believes that “financial circumstances are likely to continue to be tighter rather than looser,” he added. This week’s positive economic statistics won’t be enough for the Fed to declare that “OK, we’re going to take a break and see what happens.”
A total of 11 of the S&P 500’s 11 sectors finished Friday with a favorable outlook, with materials and financials leading the pack. Federal Reserve stress tests issued late Thursday provided a clean bill of health to the country’s largest lenders. Goldman Sachs gained $16.58 per share, or 5.8%, to $302.75, while Wells Fargo gained $2.86 per share, or 7.5%, to $40.76.
Permira, Helman and Friedman, and other investors will acquire Zendesk for $74.17 per share, the company announced in a press release. (Close): Shares of FedEx rose $16.26, or 7.2 percent, to $243.24 after the company reported a surge in revenue due to increased shipping prices and fuel surcharges.
As a result of Carnival’s announcement that revenue for the first three months of the year had increased by almost half, the cruise line’s stock rose $1.20, or 12 percent, to $10.85. Both Norwegian Cruise Line Holdings and Royal Caribbean Cruises reported rises in the double digits.
LendingTree’s shares fell 7.9% to $50.55 after the online financial marketplace cut its profitability projection for the current quarter, citing weaker demand for home loans due to higher interest rates.
Heavy trading occurred towards the end of the day. Index provider FTSE Russell rebalanced its stock benchmarks, an annual event in which it adds and eliminates businesses from indexes linked to trillions of dollars of assets, on Friday. On the day of the so-called Russell rebalancing, the managers of passive funds linked to such indexes often purchase or sell those stocks at about 4 p.m. ET to guarantee that their funds match their benchmarks.
The Nasdaq closing auction, which determines the official end-of-day pricing for Nasdaq-listed equities, saw a record 3.3 billion shares traded for $63.8 billion. The closing auction volume of 2.3 billion shares valued at $79.3 billion was the fourth-largest in NYSE history, according to the New York Stock Exchange.
With Brent crude futures at $113.12 per barrel, oil prices rose by 2.8 percent. Despite this, they have lost roughly 8% this month.
Ms. Dwek, of FlowBank, believes that the recent drop in commodity prices is a positive indicator. As a result, “that’s precisely what the Fed would want to see, given commodities are part of the reason for inflation,” she added.
It was the highest daily rise in more than three months for the Stoxx Europe 600, a pan-continental index. Asian stock markets concluded the week on a positive note. There were gains in the Shanghai Composite Index and the Nikkei 225 on Friday.
The price of bitcoin climbed past $21,000, while other cryptocurrencies remained stable. As recently as last weekend, the price had plummeted below $18,000.
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