- Nasdaq, S&P 500 posts longest weekly winning streak since November
- S&P 500 recovers 50% of bear market losses
- The S&P 500 is up 17.7% from its mid-June low
NEW YORK, Aug 12 (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 under way and boosted the S&P 500 and the Nasdaq to post its fourth consecutive week of gains.
The S&P 500 (.SPX) is up 17.7% from a mid-June low, with the latest gains coming from data this week showing a slower-than-expected rise in the price index to consumption and a surprise drop in producer prices last month.
The S&P 500 crossed a technical level of 4,231 points, indicating that the benchmark index has recouped half of its losses since falling from an all-time high in January. A 50% pullback for some indicates a bull market. Read more
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“It’s really just a number, but it certainly makes investors feel better, at least those who bought near the bottom,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
“I wouldn’t declare victory over this bear market just yet. There’s likely to be more bad news to come. But there’s a good chance we’ve seen the bottom.”
The Dow Jones Industrial Average (.DJI) rose 424.38 points, or 1.27%, to 33,761.05, while the S&P 500 (.SPX) gained 72.88 points, or 1.73% , to 4,280.15 and the Nasdaq Composite (.IX7IC) rose 2.67IC27. or 2.09%, up to 13,047.19.
For the week, the S&P 500 rose 3.25%, the Dow rose 2.92% and the Nasdaq gained 3.8%.
Volume on U.S. exchanges was 9.99 billion shares, compared with the full-session average of 11.04 billion over the past 20 trading days.
As the S&P 500 and Nasdaq posted their longest weekly winning streaks since November, analysts noted that the Federal Reserve still has its work cut out for it as it seeks to control inflation by aggressively raising interest rates. interest without causing a recession.
“Markets certainly got some good news this week on inflation,” said Dec Mullarkey, managing director of investment strategy and asset allocation at SLC Management in Boston.
“A victory lap in some respects was in order, but it’s not ‘mission accomplished’ by any means. It’s still a very slow road ahead.”
Raindrops hang on a Wall Street sign outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar
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Year-end inflation could slow to 7% or slightly lower, but getting core inflation below 4%, which is twice the Fed’s target, will be more difficult than they forecast markets, Mullarkey said.
Traders are pricing in a less aggressive Fed, with Fed funds futures showing a 55.5% chance Fed policymakers will raise rates by 50 basis points when they meet in September, in instead of 75 basis points. FEDWATCH
It was a sea of green on Wall Street for the second day in a row, with all 11 major S&P 500 sectors rising, along with semiconductors (.SOX), small caps (.RUT) and Dow transports (.DJT). Growth stocks (.IGX) rose 2.1%, while value (.IVX) advanced 1.4%.
Investors bought $7.1 billion in stocks in the week to Wednesday, according to a Bank of America note, with US growth stocks posting their biggest weekly inflow since December last year. Read more
Optimism was also fueled by data showing that US consumer sentiment rose further in August from a record low this summer and that the near-term inflation outlook for US households they went down again with the reduction in gasoline prices. Read more
After a difficult start to the year, better-than-expected second-quarter earnings from Corporate America have supported bullish sentiment in US stocks.
Overall, analysts believe the S&P 500 posted year-over-year earnings growth of 9.7% in the April-June period, much stronger than the 5.6% expected at the end of the quarter, according to Refinitiv.
Banks (.SPXBK) rose 1.4% to extend its rally for a sixth straight week.
GlobalFoundries Inc ( GFS.O ) rose 11.9% to be added to BofA Global Research’s “US #1 list.”
Advances outnumbered decliners on the NYSE by a ratio of 4.43 to 1; on the Nasdaq, a ratio of 2.76 to 1 favored the advancers.
The S&P 500 posted five new 52-week highs and 29 new lows; the Nasdaq Composite recorded 78 new highs and 39 new lows.
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Reporting by Herbert Lash in New York Additional reporting by Bansari Mayur Kamdar and Aniruddha Ghosh in Bangalore; Editing by Arun Koyyur and Matthew Lewis
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