Wall Street surges, on course to snap longest weekly losing streak in decades
Wall Street extended its rally on Friday as signs of peaking inflation and consumer resiliency sent investors into the long holiday weekend with growing optimism that the Federal Reserve's policy tightening can avoid tipping the economy into recession.
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(Reuters) -The S&P 500 index on Friday was set for its best weekly gain since mid-March as upbeat earnings, strength in consumer spending and signs of inflation peaking eased worries about a sharp slowdown in economic growth.
The benchmark index and the tech-heavy Nasdaq appeared set to snap their longest weekly losing streak since the dotcom bust in 2001, up 5.8% and 6% respectively for the week.
The blue-chip Dow was on course for its best week since November 2020, up 5.6%.
The Commerce Department’s report showed consumer spending increased by a more-than-expected 0.9% in April and inflation rose at a slower rate, raising hopes that the Federal Reserve might not hike rates as aggressively as previously thought.
March spending growth was also revised to 1.4% from 1.1%. The personal consumption expenditures price index, the Fed’s preferred inflation gauge, gained 0.2% last month after rising 0.9% in March.
A mixed set of economic data, some optimistic retail earnings forecasts, and less hawkish minutes from the Fed’s May meeting brought back investors this week.
“There is clearly a bit of wash out, a little exhaustion in the selling we are seeing. If you look at valuations, investor sentiment, and some economic indicators, there are some signs that perhaps a bottom is within reach,” said Darren Chervitz, portfolio manager at Jacob Asset Management.
All of the 11 major S&P sectors advanced, with technology up 2.7%, followed by a 2.4% rise in the consumer discretionary sector.
Ulta Beauty gained 9.9% to top the S&P 500 index after the retailer forecast strong annual results.
Enterprise software maker Autodesk Inc and PC maker Dell Technologies Inc jumped 9.7% and 12% respectively, after they beat quarterly revenue and profit estimates.
At 12:17 p.m. ET, the Dow Jones Industrial Average was up 361.99 points, or 1.11%, at 32,999.18, the S&P 500 had advanced 71.39 points, or 1.76%, to 4,129.23, and the Nasdaq Composite was up 294.14 points, or 2.51%, at 12,034.79.
Gap Inc and American Eagle Outfitters fell 0.9% and 3.8% respectively, after the clothing retailers trimmed their annual profit forecasts amid decades-high inflation.
The CBOE volatility index fell for a third straight session and was at 25.97 points.
Analysts expect trading volumes to be light ahead of a long weekend, with U.S. stock markets shut on Monday for Memorial Day holiday.
Advancing issues outnumbered decliners by a 5.96-to-1 ratio on the NYSE and by a 3.57-to-1 ratio on the Nasdaq.
The S&P index recorded three new 52-week highs and 29 new lows, while the Nasdaq posted 31 new highs and 67 new lows.
Reporting by Devik Jain and Anisha Sircar in Bengaluru; Editing by Shounak Dasgupta and Vinay Dwivedi
