After ending the previous session little changed, stocks moved sharply higher over the course of the trading day on Friday. The major averages recovered from initial weakness and climbed firmly into positive territory as the day progressed.
The Dow surged 498.02 points or 1.2 percent to 42,840.26, adding to the slim gain posted in Thursday’s session, when the blue chip index snapped a ten-day losing streak.
The tech-heavy Nasdaq also jumped 199.83 points or 1.0 percent to 19,572.60 and the S&P 500 shot up 63.77 points or 1.1 percent to 5,930.85.
Despite the strong upward move on the day, the major averages posted notable losses for the week. The Dow plunged by 2.3 percent, the S&P 500 tumbled by 2.0 percent and the Nasdaq slumped by 1.8 percent.
The rally that emerged on Wall Street came as traders reacted to the release of the Federal Reserve’s preferred readings on consumer price inflation.
The Commerce Department said its personal consumption expenditures (PCE) price index inched up by 0.1 percent in November after rising by 0.2 percent in October. Economists had expected prices to increase by another 0.2 percent.
The annual rate of growth by the PCE price index accelerated to 2.4 percent in November from 2.3 percent in October, slightly slower than the 2.5 percent jump economists had expected.
Excluding food and energy prices, the core PCE price index also edged up by 0.1 percent in November after climbing by 0.3 percent in October. Economists had expected core prices to rise by 0.2 percent.
The annual rate of growth by the core PCE price index in November came in at 2.8 percent, unchanged from October, while economists had expected an acceleration to 2.9 percent.
The slower than expected annual rates of growth seemingly inspired traders to pick up stocks at relatively reduced levels following the mid-week sell-off.
Stocks plummeted on Wednesday after the Fed forecast fewer than previously estimated interest rate cuts next year amid lingering concerns about sticky inflation.
Chicago Fed President Austan Goolsbee told CNBC’s Steve Liesman he’s hopeful the data suggests “the couple of months of firming were more of a bump than a change in path.”
Meanwhile, traders largely shrugged off concerns about a potential U.S. government shutdown, potentially reflecting optimism lawmakers will reach a last-minute deal, as is often the case.
Sector News
Banking stocks showed a significant move back to the upside, with the KBW Bank Index jumping by 2.0 percent after ending the previous session at its lowest closing level in over a month.
Considerable strength was also visible among interest rate-sensitive commercial real estate stocks, as reflected by the 1.8 percent gain posted by the Dow Jones U.S. Real Estate Index.
Interest rate-sensitive utilities stocks also regained ground, driving the Dow Jones Utility Average up by 1.5 percent on the day.
Gold, brokerage and semiconductor stocks also saw notable strength on the day, moving higher along with most of the other major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday. China’s Shanghai Composite Index edged down by 0.1 percent and Japan’s Nikkei 225 Index dipped by 0.3 percent, while Australia’s S&P/ASX 200 Index slumped by 1.2 percent.
Meanwhile, European stocks climbed well off their worst levels but still ended the day modestly lower. While the German DAX Index fell by 0.4 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index both slipped by 0.3 percent.
In the bond market, treasuries regained ground after moving sharply lower over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 4.6 basis points to 4.524 percent.
Looking Ahead
Next week’s trading activity is likely to be somewhat subdued due to the Christmas Day holiday on Wednesday, although reports on durable goods orders and new home sales may still attract some attention.
Business News
U.S. Stocks Show Strong Move To The Upside Following Inflation Data
2024-12-20 21:13:27
