Shares accumulated more gains on Wall Street on Friday as the S&P 500 had its best day in two years and only its second week of gains in the last 12 to ease some of the brutal market selling of this year.
The benchmark index rose 3.1%, with technology and banks leading the rise. The S&P 500 hit a 6.4 percent gain over the week, erasing the brutal loss it had a week earlier, although it is still about 20 percent below its record set earlier this week. year.
The Dow Jones Industrial Average rose 2.7% and the Nasdaq, with a lot of technology, finished 3.3% higher. Both indices also posted a weekly gain that more than offset last week’s losses.
Shares rebounded this week as investors speculate that the Federal Reserve should not be as aggressive in raising interest rates as previously thought as it struggles to control inflation.
The gains are a relief from the fall of Wall Street for most of the year, caused by the fact that the Fed and other central banks reversed the monetary support given to markets during the pandemic. Hoping to beat very high inflation, central banks have raised interest rates and taken other measures that hurt investment prices and threaten to slow the economy far enough to cause a recession. Many economists predict new movements.
“It’s been a good week,” said Randy Frederick, general manager of trading and derivatives at Charles Schwab. “It’s weird. At least in 2022, we’ve only had a couple of weeks in which we ended up clearly positive. It looks pretty similar to what we saw in late May, and that, of course, faded.”
The S&P 500 rose 116.01 points to 3,911.74. The Dow rose 823.32 points to 31,500.68. The Nasdaq rose 375.43 points to 11,607.62.
Consumer sentiment at historic lows
Parts of the U.S. economy are still hot, especially the job market, but some discouraging signs have recently emerged.
A report Friday confirmed that consumer sentiment has dropped to its lowest point since the University of Michigan began keeping records, especially affected by high inflation.
Another issue this week suggested that the U.S. manufacturing and services sectors are not as strong as economists thought.
Such weak data raises concerns about the strength of the economy. But they can also be good for financial markets, paradoxical as they may seem.
They could mean lower consumer demand fueling inflation, which would ultimately mean the Federal Reserve would not have to raise rates so aggressively. And interest rates drive trade in everything from stocks to cryptocurrencies.
“We’ve seen a cooling in many areas, no doubt. Gasoline purchases have gone down, home prices seem to be cooling in every way,” Frederick said. “To me, all of this speaks to the fact that what the Fed is doing now seems to have at least some impact. Now, whether or not it’s enough to reduce inflation, I don’t think we know yet.”