Damian J. TRUAZ and ALEX WEIG
Shares resumed after an early downturn on Wall Street and closed much higher on Friday, recording the largest weekly gain in 16 months.
The S&P 500 rose for the fourth day in a row, adding 1.2% to the series, which included several days with 2% growth. The Dow Jones Industrial Average was up 0.8% and the Nasdaq Composite was up 2%. Each of the three indices had the best week since November 2020.
This week’s market rally came at a time when Wall Street was encouraged by the Federal Reserve, which announced the first interest rate hike since 2018 and revealed several more. The move, which the market has been waiting for for months, sends a message that the central bank is focused on fighting the highest inflation in decades. Fed Chairman Jerome Powell also stressed confidence that the economy is strong enough to withstand higher interest rates.
The Fed’s actions and economic outlook have helped give markets a better idea of what to expect next, said Bill Norty, senior investment director at U.S. bank Wealth Management.
“This has to some extent led to relief in the stock market, which has intensified over the last few days,” he said.
Shares also rose as the price of US crude oil, which briefly exceeded $ 130 a barrel last week amid fears that Ukraine’s conflict would put pressure on energy markets, fell below $ 94 a barrel on Wednesday and has been fluctuating since then. below $ 110 per barrel.
The S&P 500 rose 51.45 points to 4,463.12, bringing the weekly gain to 6.2%. The Dow scored 274.17 points to 34,754.93, while the Nasdaq added 279.06 points to 13,893.84.
Shares of smaller companies also increased. The Russell 2000 index rose 21.12 points, or 1%, to 2,086.14.
The broad market has been volatile over the past few weeks as investors consider a number of issues, including inflation and Russia’s invasion of Ukraine. Major indexes have declined over the year as a result of a sharp reversal from solid gains over the past few years.
“This macro picture won’t change, it will take weeks and months,” said Jason Draho, head of asset allocation for America at UBS Global Wealth Management. “Nothing in the last few days will change that.”
Russia’s invasion of Ukraine has severely affected markets as investors try to assess how the conflict could affect global economic growth. Markets in Europe were particularly sensitive to the war and were mostly lower on Friday. Oil prices have been extremely volatile, with indicative U.S. crude oil remaining above $ 100. Energy prices were relatively stable on Friday: US crude oil stood at $ 104.70 a barrel and Brent crude, an international standard, was $ 107.93 a barrel.
The ongoing war in Ukraine continues to provoke sentiment after Ukrainian President Volodymyr Zelensky called for more aid to his country after days of bombing civilian facilities. Wall Street is also still concerned about rising interest rates, as well as rising COVID-19 cases in China and Europe.
High energy prices only heighten concerns about inflation and whether the pressure on consumers will end up squeezing costs and economic growth.
Rising inflation has prompted central banks to reconsider their low interest rate policies. The Bank of England was one of the most aggressive, and on Thursday it raised its key interest rate for the third time since December. The Federal Reserve announced a key interest rate hike of 0.25% on Wednesday. This is the first rate increase since 2018, and is expected to be followed even more this year as the Fed tries to curb inflation.
Profits on Friday were wide. Technology and communications stocks, retailers, automakers and other consumer-oriented companies have helped lift the market. Chip maker Nvidia rose 6.8%, parent Facebook Meta rose 4.2% and Tesla rose 3.9%. Only the shares of public utilities became cheaper.
Bond yields fell. Yields on 10-year Treasury bonds fell to 2.14% from 2.19% at the end of Thursday.
Several stocks have made big strides since the release of their latest financial results and updates. FedEx fell 4% after its third-quarter earnings fell short of Wall Street forecasts. US Steel fell 4.6% after giving investors a disappointing profit forecast.