© Reuters. FILE PHOTO: Traders work on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 8, 2022. REUTERS/Andrew Kelly/File Photo
By Herbert Lash and Bansari Mayur Kamdar
NEW YORK (Reuters) – Wall Street closed higher on Friday as signs that inflation may have peaked in July boosted investor confidence that a bull market could be in the works. and spurred Nasdaq to post its fourth straight weekly gain.
The S&P 500 is up 17.5% from its mid-June low, with the latest gains coming from this week’s data showing a slower-than-expected rise in consumer prices and a decline in producer prices. surprise last month.
The S&P 500 index surpassed a closely watched technical level of 4,231, indicating that the benchmark index has recovered half of its losses since plunging from its all-time high in January. The 50% retracement on several signals indicates a bull market.
Graphics: US Inflation: Over Peak?, https://graphics.reuters.com/USA-ECONOMY/INFLATION/zdvxozxmlpx/chart.png
“It’s really just a number, but it certainly makes investors feel better – at least those who bought near the bottom,” said Tim Ghriskey, investment strategist at Inverness Counsel in New York. “.
“I’m not going to claim victory over this bear market. There’s a chance some bad news is still out there. But there’s a very good chance we’ve seen a bottom.”
According to preliminary data, the S&P 500 rose 72.13 points, or 1.71%, to 4,279.40, while the Nasdaq Composite added 265.14 points, or 2.07%, to 13,045.05. The Dow Jones Industrial Average rose 418.64 points, or 1.26%, to 33,755.22.
As the S&P 500 and Nasdaq posted their longest weekly winning streaks since November, analysts noted that the Federal Reserve still had to cut its job as it tried to rein in inflation by being aggressive. raise interest rates without causing a recession.
“The markets have certainly received great news this week on inflation,” said Dec Mullarkey, managing director of investment strategy and asset allocation at SLC Management in Boston.
“The winning lap was in some respects in order, but it’s not ‘mission accomplished’ by any means. It’s still a very slow road ahead.”
Year-end inflation could dip to 7% or slightly below, but core inflation below 4%, more than double the Fed’s target, will be tougher than markets anticipate, Mullarkey said.
Traders are pricing in a less hawkish Fed, with the nurtured fund futures showing a 55.5% chance of Fed policymakers raising rates by 50 basis points when they do. meet in September, instead of 75 basis points. [FEDWATCH]
It was a sea of blue on Wall Street for the second straight day, with all 11 major S&P 500 sectors up, along with semiconductors, small caps and the Dow. Growth stocks outperform value stocks.
Investors bought $7.1 billion in shares in the week to Wednesday, according to a Bank of America (NYSE:) note, with U.S. growth stocks recording their biggest weekly inflows since since December last year.
Banks rallied to extend their gains for the sixth straight week. Also fueling optimism were data showing that US consumer sentiment continued to rise in August from record lows this summer and the short-term inflation outlook for US households eased a bit. again due to lower gas prices.
After a rough start to the year, better-than-expected second-quarter earnings from Corporate America supported upbeat sentiment for US stocks.
Aggregate analysts believe the S&P 500 posted year-on-year earnings growth of 9.7% for the April-June period, much stronger than the 5.6% predicted at the end. quarter, according to Refinitiv.
GlobalFoundries Inc has jumped on BofA Global Research’s “US 1” list.