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Wall Street rallies, capping frenetic week with best day of the year

EconomyJan 28, 2022 08:30PM ET
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© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022. REUTERS/Brendan McDermid

By Stephen Culp

NEW YORK (Reuters) - Wall Street surged on Friday, notching its best day so far in 2022 after another zigzag session, ending a tumultuous week marked by mixed corporate earnings, geopolitical turmoil and an increasingly aggressive Federal Reserve.

All three major U.S. stock indexes began the day in the red, but turned increasingly green as the session progressed, with tech shares doing the heaviest lifting.

The S&P 500 and the Dow posted gains from last Friday's close, but the Nasdaq was essentially flat on the week, capping five days of topsy-turvy trading.

Still, the bar for "best daily gains of the year" was rather low. Even with Friday's jump, the S&P 500 is down 7% so far in 2022, with the Nasdaq and the Dow suffering respective drops of 12% and 4.4% over the same time period.

"Investors are trying to adjust to the impact of this higher rate cycle," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey. "For some of them, stocks still remain more attractive than bonds in a rising rate environment, and they have been fishing around for where a bottom might be."

"You're seeing bargain-hunting in a number of stocks, particularly in the Nasdaq," Meckler added.

Economic data released on Friday showed a drop in consumer spending coupled with the lowest consumer sentiment reading in a decade, and year-on-year Core PCE prices - the Federal Reserve's preferred inflation yardstick - came in at 4.9%, slightly hotter than expected.

The graphic below shows how far core PCE and other major indicators have risen above the Fed's average annual 2% target.

(Graphic: Inflation, https://graphics.reuters.com/USA-STOCKS/gdvzynqmopw/inflation.png)

The Fed made it clear at the conclusion of its monetary policy meeting on Wednesday that they intend to take off their gloves and combat stubbornly persistent inflation by hiking key interest rates more aggressively than many market participants expected.

The Dow Jones Industrial Average rose 564.69 points, or 1.65%, to 34,725.47, the S&P 500 gained 105.34 points, or 2.43%, to 4,431.85 and the Nasdaq Composite added 417.79 points, or 3.13%, to 13,770.57.

Among the 11 major sectors of the S&P 500, all but energy ended green. Tech stocks were the clear winners, gaining 4.3%, the biggest one-day jump for the sector since April 6, 2020.

Fourth-quarter reporting season was firing on all cylinders, with 168 of the companies in the S&P 500 having reported. Of those, 77% have delivered consensus-beating results, according to Refinitiv data.

But investors have been increasingly focused on guidance, and the extent to which companies expect ongoing global supply challenges to affect their bottom line going forward.

"As we move into 2022, and as Omicron peaks and the weather improves, I expect supply-chain pressures to ease," Said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. "(They) will probably peak sometime this quarter, and ease throughout the year."

Data storage equipment maker Western Digital (NASDAQ:WDC) cited supply-chain headwinds after it reported lower than expected revenue and provided a disappointing forecast, sending its shares sliding 7.3%.

Caterpillar Inc (NYSE:CAT) fell 5.2% following the equipment maker's warning that higher production and labor costs will pressure its profit margin.

Chevron Corp (NYSE:CVX) dropped 3.5% on downbeat fourth-quarter profit.

However, Apple (NASDAQ:AAPL)'s 7.0% jump gave the S&P 500 and the Nasdaq their biggest boost, the day after the company posted record iPhone sales in the holiday quarter.

Visa Inc (NYSE:V) surged 10.6% following its quarterly earnings beat driven by increased spending on international travel and e-commerce.

Advancing issues outnumbered declining ones on the NYSE by a 1.83-to-1 ratio; on Nasdaq, a 1.92-to-1 ratio favored advancers.

The S&P 500 posted 5 new 52-week highs and 24 new lows; the Nasdaq Composite recorded 16 new highs and 753 new lows.

Volume on U.S. exchanges was 12.80 billion shares, compared with the 12.10 billion average for the full session over the last 20 trading days.

Wall Street rallies, capping frenetic week with best day of the year
 

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Comments (24)
Alpha Omega
Alpha Omega Jan 29, 2022 7:41PM ET
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Rates have risen but not advertised... 30 year mortgage at 3.64 now , from 3.14 six months ago. I can fathom 4.5 by the end of summer.
Ralph Patrick
Ralph Patrick Jan 29, 2022 12:45PM ET
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If they don't crash the market asap, midterms will be completely lost over inflation. The common person cares nothing about stonkers but hates inflation.
Darrell Peterson
Darrell Peterson Jan 29, 2022 3:06AM ET
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Per the Fed: " Why deny the Dip Buyers their only solace in life. Per Reality: Because it's unsustainable.
Tony Barnes
Tony Barnes Jan 29, 2022 2:48AM ET
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Next Tuesday it will be down again. Let's see
Darrell Peterson
Darrell Peterson Jan 29, 2022 2:07AM ET
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These lame back and forth narratives over the last several months says bet the Farm on a huge decline right around the corner, you have been forewarned , same as it has always been guppies.
perplexed76 .
perplexed76 . Jan 28, 2022 10:15PM ET
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stock gamblers are just agonizing in convulsions. Black swan from china is coming
Chad RicherThanYou
Chad RicherThanYou Jan 28, 2022 9:14PM ET
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Hyperinflation is coming
Dave Jones
Dave Jones Jan 28, 2022 6:56PM ET
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smoke...mirrors...rainbows and unicorns. Everything is awesome again phew!!!
Benedict Oluwasemilore
Benedict Oluwasemilore Jan 28, 2022 4:56PM ET
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the market is out right around 3pm today
Matthew VS
Matthew VS Jan 28, 2022 2:36PM ET
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The market will bleed out right around 3pm today. This is my prediction. I am 3 for 3 so far.
Ronald Warren
Ronald Warren Jan 28, 2022 2:36PM ET
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Any thoughts on Monday?
Andy Huang
Andy Huang Jan 28, 2022 2:36PM ET
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3 for 4 now
 
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