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Wall Street surges to sharply higher close ahead of Fed week

Published 10/28/2022, 05:34 AM
Updated 10/28/2022, 07:58 PM
© Reuters. FILE PHOTO: Amazon logo is seen in front of a decreasing stock graph in this illustration taken April 29, 2022. REUTERS/Dado Ruvic/Illustration

© Reuters. FILE PHOTO: Amazon logo is seen in front of a decreasing stock graph in this illustration taken April 29, 2022. REUTERS/Dado Ruvic/Illustration

By Stephen Culp

NEW YORK (Reuters) - A robust, broad-based rally sent Wall Street to a sharply higher close on Friday as encouraging economic data and a sunnier earnings outlook fueled investor risk appetite ahead of next week's much-anticipated two-day policy meeting of the Federal Reserve.

All major U.S. indexes ended the session up about 2.5% or more, with the S&P and the Nasdaq notching their second straight weekly gains. The blue-chip Dow posted its fourth consecutive Friday-to-Friday advance and its biggest weekly percentage gain since May.

"This has been one of the best months (so far) in the history of the Dow, suggesting the bear market likely ended," said Ryan Detrick, chief market strategist at Carson Group in Omaha. "Big monthly moves historically happen at the end of bear markets."

"This is the second Friday in a row we’ve seen aggressive buying suggesting investors are growing more comfortable holding over the weekend," Detrick added.

A 7.6% rebound in Apple Inc (NASDAQ:AAPL) helped soften the blow of the 6.8% plunge for Amazon.com (NASDAQ:AMZN) shares, in the wake of the two market leaders' results.

Solid earnings beats from Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM) and other companies outside the tech and tech-adjacent megacap group have brightened aggregate earnings estimates for the quarter.

Analysts now see third-quarter S&P 500 earnings growth of 4.1%, up from 2.5% on Thursday, according to Refinitiv data.

"We’ve seen some high-profile misses from significant large-cap names," Detrick said. "But under the surface many of the smaller and midsize companies have been quite impressive with their earnings results."

On the economics front, the Commerce and Labor Departments released data that showed robust consumer spending and easing wage growth, respectively.

Financial markets have now priced in an 84.5% likelihood of a fifth consecutive 75 basis point interest rate hike at the conclusion of the Fed's Nov. 1-2 policy meeting, and a 51.4% chance the central bank will decelerate to 50 basis points in December, according to CME's FedWatch tool.

"The door is cracked open on the possibility that we might see a more dovish Fed come December’s policy meeting, whereas a month ago that door was locked and slammed shut," Detrick added.

The Dow Jones Industrial Average rose 828.52 points, or 2.59%, to 32,861.8, the S&P 500 gained 93.76 points, or 2.46%, to 3,901.06 and the Nasdaq Composite added 309.78 points, or 2.87%, to 11,102.45.

Of the 11 major sectors of the S&P 500, all but consumer discretionary stocks, weighed down by Amazon shares, ended the session green. Tech shares enjoyed the largest percentage gain.

Third-quarter reporting season has passed the halfway point, with 263 of the companies in the S&P 500 having reported. Of those, 73% have beaten consensus expectations, according to Refinitiv.

Intel Corp (NASDAQ:INTC) jumped 10.7% after cutting its spending forecast, while T-Mobile US (NASDAQ:TMUS) Inc's subscriber forecast hike sent its shares up 7.4%.

Twitter Inc (NYSE:TWTR) was delisted from the New York Stock Exchange, closing the book on Tesla (NASDAQ:TSLA) Inc chief Elon Musk's $44 billion purchase of the company.

Advancing issues outnumbered declining ones on the NYSE by a 2.87-to-1 ratio; on Nasdaq, a 2.12-to-1 ratio favored advancers.

© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 14, 2022. REUTERS/Brendan McDermid

The S&P 500 posted 32 new 52-week highs and eight new lows; the Nasdaq Composite recorded 117 new highs and 115 new lows.

Volume on U.S. exchanges was 11.26 billion shares, compared with the 11.53 billion average over the last 20 trading days.

Latest comments

They need to rename the U.S. market to " The Apple Stock Market" . You talk about a narrow market. 1 stock holding the hold thing up.
crypto is sideways
What planet is this reporter on?
like they putting some pressure on FED or what? )))) Make it 5%, Jerome, to kick these parasites' butts
Market rallied as if there is no inflation and FED is going to decrease interest rates
I like the 3.000 spam comments in investing.com comments.. it really makes me fell that this app/site is very professional
send reports
sharp rallies are part and parcel of bear market behavior
You can't fight stubborn inflation by incremental increases in interest rate. Sooner or later the FED will realize that. THER NO SUCH THING CALLED SOFTLANDING.
Rate increases are almost over. The federal government will go bust paying interest on the debt if rates don't ease. By next summer, new costs locked in and you will be back to 2%.
Fed has to jack up +1% at minimum, possibly +1.50% next week.
Big oil earnings say Let's Go Brand0n
pump & dump at the highest level. Hedge Funds also need to make money ... at the cost of retailer investors. LoL
Apple's operation costs almost exceeded their total net sales and cost of sales giving them a net income of just 0.82% YoY. Not exactly worth the hype, but whatever keeps the bulls disillusioned I guess!
Bull trap at its finest. Pce is the same. Higher than expexted personal spending. The fed has just begun. You sell every rally without hesitation. Its common sense. 200 a share X14X is 2800 s&p. Not hard to understand
How is it hopes of slowing raid hikes? Why not good GDP? or earnings or good PCE numbers
How is it hopes of slowing raid hikes? Why not good GDP? or earnings or good PCE numbers?
More uninhibited "gains" criminally manufactured by Wall Street.  And a miraculous lack of profit taking to boot.  Will the biggest investment JOKE in the world tank "in late trade"?
Yes. Next week it will be a full on collapse. It’s imminent
Not until November 9th. Go long on Powell next week. The administration has him by the short hairs. He and his compadres did real well, then cashed at the end of '21. Doesn't matter how the election turns out. Biden is still in charge for two more years. .50 rate hike/rally.
Amzn is upbeat actually, but maybe the bad mouthing want to buy the shares cheap.
rally ignited. aapl jumping +8% is the clear indication. amazing, so be it
have you ever seen a bigger casino?
Yes.  Both the forex & bond markets are bigger than the stock market.
Another criminally manufactured "rally" inflates stocks, which will be unloaded on mutual funds investing on behalf of retirement plans.  The ultimate incarnation of Charles Ponzi's work on full display, purportedly powered by one-hit-wonder Apple.  BIGGEST INVESTMENT JOKE IN THE WORLD.
Mitchel. Despite the fact that it is illicit, you've got a handle on it. Hope you're trading your way into a comfortable retirement!
it looks unstoppable rally.
Look at the DOW!! Unbelievable!! Gotta ' love it!! Making money on the way up. Gonna' load up on puts election day!!
Shorters getting burned
If the Fed Pivots, I feel really sorry for the average person in the long run.
amzn and goog are likely added to dow.
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