Wall Street gains ground, turning higher for the week

By Damian J. Troise And Alex Veiga, The Associated Press on December 21, 2022.

NEW YORK – Stocks rose on Wall Street, lifting major indexes into the green for the week as investors welcomed a report showing consumer confidence is holding up better than expected. That’s despite the Federal Reserve’s campaign to fight inflation by reining in the economy with sharp increases in interest rates. The S&P 500 index climbed 1.5% Wednesday and the Nasdaq rose 1.5%. The Dow Jones Industrial Average added 1.6% with a lot of help from Nike, which soared after reporting better-than-expected results. Treasury yields mostly fell. Technology stocks were among the big winners. Energy stocks gained ground along with rising oil prices.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Stocks rose on Wall Street in afternoon trading Wednesday, lifting major indexes into the green for the week as investors remain focused on stubbornly hot inflation and a potential recession.

The S&P 500 rose 1.4% as of 3:24 p.m. Eastern. The Dow Jones Industrial Average rose 496 points, or 1.5%, to 33,345 and the Nasdaq rose 1.5%.

Technology companies powered a big share of the rally. Apple rose 2.4%.

Health care and financial company stocks also helped lift the market. Eli Lilly rose 2.4% and Bank of America added 1.4%.

Nike surged 13.2% for the biggest gain among S&P 500 stocks after reporting results that trounced analysts’ estimates. FedEx rose 3.6% after reporting strong earnings. Energy stocks gained ground as U.S. crude oil prices settled 2.9% higher. Hess gained 3.3%

Small company stocks also gained ground, lifting the Russell 2000 index 1.6% higher.

Treasury yields were mostly lower. The yield on the 10-year Treasury, which influences mortgage rates, slipped to 3.68% from 3.69 late Tuesday.

European markets closed higher and Asian markets closed mixed overnight.

Investors are grappling with expectations that interest rates will remain high for longer than they had expected as the Federal Reserve continues fighting stubbornly hot inflation. The federal funds rate stands at a range of 4.25% to 4.5%, the highest level in 15 years. Fed policymakers forecast that the central bank’s rate will reach a range of 5% to 5.25% by the end of 2023. Their forecast doesn’t call for a rate cut before 2024.

Wall Street is worried that central banks will go too far in raising interest rates and ultimately slow the economy so much that it slips into a recession. That has left investors closely focused on economic updates to get a better idea of how businesses and consumers are dealing with inflation.

Sales of previously occupied homes fell more than economists expected in November. The housing market has been a strong area of the economy, but has been tempered by rising mortgage rates. That has made an already tight housing market even more difficult for prospective homebuyers.

Consumer confidence is surprisingly strong, despite inflation squeezing wallets. The Conference Board reported Wednesday that its consumer confidence index rose to 108.3 in December, up from 101.4 in November. It’s a sharp rebound, pushing the index to its highest level since April. Last month’s figure was the lowest since July.

“The news has delivered a kind of a sweet spot for the Federal Reserve,” said Megan Horneman, chief investment officer at Verdence Capital Management. “The consumer is staying relatively resilient.”

Consumer spending, along with the employment market, has been another strong area of the economy that has helped protect it from slipping into a recession. Wall Street has been hoping that the Fed can win its fight against inflation and avoid a recession, what economists call a “soft landing.” The latest consumer confidence report raises hopes for that outcome in 2023, Horneman said.

The government will release a closely watched monthly snapshot of consumer spending on Friday, the personal consumption expenditure price index for November. The report is monitored by the Fed as a barometer of inflation, which has been easing, but at a relatively slow pace. Economists expect the report to show that inflation continued cooling in November.

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Elaine Kurtenbach and Matt Ott contributed to this report.

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