FILE - The New York Stock Exchange on Wednesday, June 29, 2022 in New York. (AP Photo/Julia Nikhinson, File)
NEW YORK (AP) – Wall Street rose sharply to add to an already strong November, which is on track to be one of the market’s best months of the year. The S&P 500 jumped 1.6% Friday in a widespread rally that lifted everything from Big Tech behemoths to the smallest, money-losing companies. The Dow gained 391 points, and the Nasdaq rose 2%. Stocks climbed as markets recovered from the prior day’s slump, triggered in part by worries about additional hikes to interest rates by the Federal Reserve. Bets diminished for a December hike by the Fed, even though a report in the morning showed inflation expectations on the rise.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) – Wall Street is gaining ground Friday to close what’s been a mostly listless week following its fireworks since the summer.
The S&P 500 was up 1.3% in afternoon trading and on track to end the week with a solid gain. That would follow its best week of the year, which itself came after months of sharp losses.
The Dow Jones Industrial Average was up 327 points, or 1%, as of 2:28 p.m. Eastern time, and the Nasdaq composite was 1.9% higher.
More companies reported better profits for the latest quarter than analysts expected, but the focus is swinging toward what companies will do later this year and beyond amid high interest rates and expectations for a slowdown in economic growth.
Illumina tumbled 9.5% even though the maker of DNA-sequencing and other technology products reported better results for the third quarter than expected. It cut its financial forecasts for the full year and said “the environment remains challenging.”
Wynn Resorts also topped analysts’ expectations for the latest quarter, but its stock fell 5.5% amid concerns about some weaker trends underneath the surface in Macao.
On the winning side of Wall Street was Hologic, which rose 6.7% after the maker of diagnostics and other products focused on women’s health reported better profit than expected. Doximity was another winner, up 15.4% after it likewise reported stronger profit than forecast.
Such earnings reports have helped to support the stock market, but the main driver recently has been what’s been happening in the bond market.
Treasury yields gave back some of their gains from the prior day to release some of the pressure that’s built up on Wall Street. The yield on the 10-year Treasury dipped to 4.62% from 4.64% late Thursday.
Big Tech stocks tend to be some of the biggest beneficiaries of easier yields, and a 2% gain for Apple and 2.4% rise for Microsoft were two of the strongest forces pushing the S&P 500 upward.
A jump in yields on Thursday had knocked stocks lower to break an eight-day winning streak for the S&P 500, one of its longest in the last two decades. High interest rates and yields hurt prices for stocks and other investments, while slowing the economy broadly and raising the pressure on the financial system.
Thursday’s rise in yields came after Fed Chair Jerome Powell dashed some of the hopes building among traders that the Federal Reserve may finally be done hiking its main interest rate. He said Thursday that no decisions on rates have been made yet and that the Fed “will not hesitate” to raise them again if inflation doesn’t appear to be heading back to its 2% target.
The central bank has been saying that its next moves will depend entirely on what incoming data about inflation and the economy say.
A report on Friday morning caused yields to wobble after it suggested U.S. consumers are girding for higher inflation. Their expectations for inflation over the long run rose to the highest since 2011, according to a preliminary report from the University of Michigan.
The Federal Reserve has said it wants to keep such expectations low because they otherwise could lead to a vicious cycle that keeps inflation high.
Treasury yields pared their drops following the report, which caused stock indexes to briefly pare their own gains.
But the report also suggested overall sentiment among consumers is weakening more than economists expected. That could undercut strong spending by consumers, which has kept the economy strong recently but also added upward pressure to inflation.
The Fed has been on hold recently with its overnight interest rate after yanking it above 5.25% to its highest level since 2001 from nearly zero.
The sharp moves in financial markets recently have been “all about bonds,” say Michael Hartnett and other strategists at Bank of America.
After the 10-year Treasury yield popped above 5% last month to its highest level since 2007, in part on expectations for big borrowing by the U.S. government, the S&P 500 briefly dropped more than 10% below its high point for the year. Since then, the market has rebounded as “year-end greed” set in and the 10-year yield regressed, the strategists wrote in a BofA Global Research report.
In stock markets abroad, indexes were lower across most of Europe and Asia to follow up on Wall Street’s losses from a day before.
In the oil market, crude prices regained some more of their sharp losses from earlier in the week. A barrel of benchmark U.S. crude rose 1.9% to $77.17. Brent crude, the international standard, added 2.4% to $81.93 per barrel. Both remain down by more than 3% for the week on worries about supplies outstripping demand.
A financial services business of China’s biggest bank, ICBC, said it was hit this week by a ransomware attack that reportedly disrupted trading in the U.S. Treasury market.
New York-based Industrial and Commercial Bank of China Financial Services handles trades and other services for financial institutions. It said it had isolated affected systems and that trades had cleared by Thursday. It was unclear how much of an impact the attack had on Treasury market trading.
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AP Writers Zimo Zhong and Matt Ott contributed.
