Wall Street advanced on Friday, nearing the end of an rocky week in which economic data and corporate earnings guidance both hinted at softening demand but also economic resiliency ahead of next week’s Federal Reserve monetary policy meeting.
All three major U.S. stock indexes were last green after see-sawing earlier in the session, with the Nasdaq out front.
From last Friday’s close, the S&P and the Dow have set a course for their third weekly gains in four, while the tech-laden Nasdaq appears set to notch its fourth straight weekly advance.
The Commerce Department’s hotly anticipated personal consumption expenditures (PCE) report arrived largely in line with consensus, showing softening demand and cooling inflation – which is exactly what the Federal Reserve’s restrictive interest rate hikes are intended to accomplish.
“(The PCE report) is welcome news with regards to the Fed’s mission, but they’re not ready to retreat at this point,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. “They will stay focused on their mission, but the hope is that they will begin to moderate their hawkish tones.”
Fed Chair Jerome Powell has clearly stated that the central bank’s battle against decades-high inflation is far from over, however. Financial markets still believe the central bank will hike the Fed funds target rate by another 25 basis points at the conclusion of next week’s policy meeting.
Fourth-quarter earnings season is running on all cylinders, with 143 of the companies in the S&P 500 having reported. Of those, 67.8% have beaten Street expectations, slightly better than the 66% long-term average, but well below the 76% beat rate over the past four quarters, according to Refinitiv.
Analysts now see aggregate S&P 500 earnings falling 2.9% year-on-year, compared with the milder 1.6% annual drop seen on Jan. 1, per Refinitiv.
The Dow Jones Industrial Average (.DJI) rose 81.28 points, or 0.24%, to 34,030.69, the S&P 500 (.SPX) gained 18.1 points, or 0.45%, to 4,078.53 and the Nasdaq Composite (.IXIC) added 133.41 points, or 1.16%, to 11,645.82.
Among the 11 major sectors of the S&P 500, consumer discretionary (.SPLRCD) led the percentage gainers, while energy (.SPNY) suffered the largest percentage losses.
Shares of Intel Corp (INTC.O) plunged 7.1% after the chipmaker provided dismal earnings projections.
Chevron Corp (CVX.N) posted record 2022 profit, but its fourth quarter earnings fell short of expectations, dragging the stock down 4.1%.
Rival payment companies American Express Co (AXP.N) and Visa Inc (V.N) reported consensus-beating results, easing worries of waning consumer demand. Their shares jumped 11.5% and 3.0%, respectively.
Bed Bath & Beyond Inc (BBBY.O) rose 4.2% in a partial rebound after plummeting 22.2% on Thursday in the wake of JPMorgan issuing a loan default notice.
Next week, a raft of high profile earnings reports are expected, notably from Apple Inc (AAPL.O), Amazon.com (AMZN.O), Alphabet Inc (GOOGL.O) and Meta Platforms (META.O), among others.
Advancing issues outnumbered declining ones on the NYSE by a 1.54-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored advancers.
The S&P 500 posted 14 new 52-week highs and no new lows; the Nasdaq Composite recorded 80 new highs and 29 new lows.