Wall Street advanced on Friday, marking the end of an rocky week in which economic data and corporate earnings guidance hinted at softening demand, but also economic resiliency, ahead of a US Federal Reserve monetary policy meeting on Tuesday and Wednesday.
All three major US stock indices closed the session green, with the NASDAQ Composite, powered by megacap momentum stocks, posting the biggest gain.
The S&P 500 and the Dow Jones Industrial Average posted their third weekly gains in four weeks this year, while the tech-laden NASDAQ notched its fourth straight weekly advance.
So far in the early weeks of this year, the NASDAQ has jumped 11 percent, while the S&P 500 and the Dow have gained 6 percent and 2.5 percent respectively.
On Friday, the Dow rose 28.67 points, or 0.08 percent, to 33,978.08, the S&P 500 gained 10.13 points, or 0.25 percent, to 4,070.56 and the NASDAQ added 109.30 points, or 0.95 percent, to 11,621.71.
From a week earlier, the Dow was up 1.81 percent, the S&P 500 rose 2.45 percent and the NASDAQ gained 4.32 percent.
“It’s a nice end to another solid week of what’s shaping up to be a historically strong month,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. “It’s a realization that inflation continues to come down quickly and that is alleviating a lot of worries regarding the economy.”
The US Department of Commerce’s hotly anticipated personal consumption expenditures report arrived largely in line with consensus, showing softening demand and cooling inflation — which is what the Fed’s restrictive interest rate hikes are intended to accomplish.
The commerce department report is “another building block to the inflation data we’ve been seeing recently,” Detrick said. “Supply chains continue to open up and improve, opening the door for the Fed to end its aggressive rate hiking cycle.”
However, Fed Chair Jerome Powell has said that the central bank’s battle against decades-high inflation is far from over. Financial markets still believe the central bank will hike the Fed funds target rate by another 25 basis points at the conclusion of its policy meeting.
Fourth-quarter earnings season is running on all cylinders, with 143 of the companies in the S&P 500 having reported.
Of those, 67.8 percent have beaten Wall Street expectations, slightly better than the 66 percent long-term average, but well below the 76 percent beat rate over the past four quarters, Refinitiv data showed.
Analysts forecast that aggregate S&P 500 earnings fall 2.9 percent year-on-year, compared with the milder 1.6 percent annual drop seen on Jan. 1.
Among the 11 major sectors of the S&P 500, consumer discretionary led the percentage gainers, while energy posted the largest percentage loss, down 2 percent.
Shares of Intel Corp plunged 6.4 percent after the chipmaker provided dismal earnings projections. Chevron Corp posted record profit for the whole of last year, but its fourth quarter earnings fell short of expectations, dragging the stock down 4.4 percent.
Rival payment companies American Express Co and Visa Inc reported consensus-beating results, easing worries of waning consumer demand.
There shares jumped 10.5 percent and 3 percent respectively.
In addition to the Fed meeting and January employment data, a string of high profile earnings reports are on tap in the coming days, notably from Apple Inc, Amazon.com Inc, Alphabet Inc and Meta Platforms Inc.
Volume on US exchanges was 11.88 billion shares, compared with the 11.10 billion average over the past 20 trading days.
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