Stocks rally toward first weekly win streak since summer
NEW YORK — Wall Street rallies Friday to celebrate another strong week for stocks, led in part by Apple and other companies that earned even greater profits than expected during the summer.
The S&P 500 was 2.3% higher in afternoon trading, and is on track for its first back to back weekly gains since August. The Dow Jones Industrial Average was up 737 points, or 2.3%, to 32,769, as of 1: 22 p.m. Eastern time, and the Nasdaq composite was 2.3% higher.
Stocks have been reviving recently due to hopes for a Federal Reserve “pivot”, where the central bank reduces the large interest-rate increases that have shaken markets. Although such a move could help the market, many analysts believe it may not be enough.
” This rally has now become a bit irrational, and fragile at this point,” Liz Young, chief investment strategist at SoFi.
The central bank has been clear about its intention to not go too far to control inflation, she stated. This makes any hopes of a pullback that could have big gains seem premature.
Recently, many large U.S. companies have reported stronger earnings than anticipated, but the bag is still mixed.
Apple jumped 7.7% and was the largest force lifting the S&P 500 after reporting a larger revenue and profit than expected for its latest quarter. Intel jumped 9.5% after delivering much bigger profit than analysts forecasted even though it said it saw “worsening economic conditions.”
Gilead Sciences soared 12.1%, and T-Mobile US gained 6.9% after they also topped Wall Street’s profit expectations.
They helped to offset an 8.2% drop in Amazon’s revenue forecast. After revealing some troubling trends, it was the latest Big Tech company to suffer. This is a significant turnaround after the group had dominated Wall Street for many years with seemingly unstoppable growth.
Earlier this week, Meta Platforms reported a nearly 25% drop in its value due to falling advertising sales and fierce competition from TikTok. The parent company of Google and Microsoft also reported slowdowns.
These woes have caused a sharp division on Wall Street this week between the market’s lagging Big Tech stocks, and the rest. The Nasdaq, which has a lot of high-growth tech stocks is on track to gain 1.7% this week. The Friday boost by Apple would have made it even worse. The Dow is on track for a 5.5% increase this week, thanks to its less tech-focused focus.
Rising rates have impacted Big Tech stock prices more than the rest of market. The pressure grew Friday as yields rose.
” The markets don’t want to believe that an earnings recession might be possible, Young stated.
Data that was released this morning showed that the increases in wages and other compensation received by U.S. workers during the summer were in line with economists’ expectations. This should ensure that the Fed will continue to raise rates quickly in the hope of weakening enough the job market to reduce the nation’s high inflation. Other data showed that the Fed’s preferred measure for inflation is still very high and that households in the United States continue to spend more in order to combat it.
The Fed is trying to suppress inflation by limiting the purchases of households and businesses that are necessary to keep it high. It is doing this by deliberately slowing down the economy and the job market. It is possible that it could go too far, causing a sharp downturn.
The Fed has already increased its overnight benchmark interest rate to a range from 3% to 3. 25% up from virtually zero in March. It is expected that it will push through another increase of three times the usual size next week before potentially making a smaller increase in December. Higher rates not only slow down the economy but also affect stock prices and other investments.
The yield on the two year Treasury, which tends towards predicting Fed action, rose from 4. 41% was 4. 28% on Thursday.
The 10-year yield, which helps set rates for mortgages and many other loans, climbed to 4. 01% from 3.93%. After a long legal battle, Elon Musk has taken over Twitter’s stock.
Stock indexes in Europe were mixed in moderate trading.
Shares dropped 0.9% in Tokyo despite the approval of a massive stimulus spending plan to help the No. 3. Inflation. The Bank of Japan concluded a policy meeting by retaining its extremely lax monetary policy, even though it predicted higher inflation.
Associated Press writers Elaine Kurtenbach, Matt Ott and Mari Yamaguchi contributed.
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