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Wall Street scores first weekly gain since mid-August

Economy Sep 09, 2022 06:41PM ET
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© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 7, 2022. REUTERS/Brendan McDermid
 
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By Carolina Mandl

(Reuters) - U.S. stocks rallied on Friday, with the major indexes recording their first weekly gain in four weeks as investors went on a buying spree, shrugging off concerns about the economic outlook.

The gains followed a sharp sell-off that began in mid-August, triggered by concerns about the impact of tighter monetary policies and signs of an economic slowdown in Europe and China.

Analysts said this week's market recovery was more related to previous overselling as uncertainty remained high about inflation and the Federal Reserve's aggressiveness in interest rate hikes.

"It's not surprising we get a little bit of a bounce like we're getting here, as a lot of this is technical," said Jack Janasiewicz, lead portfolio strategist and portfolio manager at Natixis Investment Managers Solutions.

"I wouldn't be shocked if we started the week off with a little bit more strength and then we sort of settle down and give back a little bit as we get ready for the CPI," he added, looking ahead to next week.

Investors awaited August's consumer prices (CPI) report on Tuesday for any signs that inflation may be easing. It is expected to show that prices rose at an 8.1% pace over the year in August, compared with 8.5% in July.

Wells Fargo (NYSE:WFC) economists expect headline inflation to log its steepest monthly decline since the peak of the pandemic in April 2020, helped by a pullback in gas prices.

All 11 major S&P sectors traded higher on Friday, with communication services, technology, energy and consumer discretionary leading the way.

Hammered since the beginning of the year over concerns about higher interest rates, high-growth stocks rose in the week.

Investors are jittery about the prospects of another outsized interest rate hike from the Federal Reserve. On Friday, Fed Governor Christopher Waller said the Fed should be aggressive with rate hikes while the economy "can take a punch," while Kansas City Fed President Esther George said taming inflation could be a tough task.

Both remarks come after Fed Chair Jerome Powell said on Thursday that the U.S. central bank is "strongly committed" to controlling inflation.

Traders are pricing in a 90% chance of a 75 basis point rate hike at the next meeting, up from 57% a week earlier, according to CME Group's (NASDAQ:CME) Fedwatch Tool https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html?redirect=/trading/interest-rates/fed-funds.html.

The CBOE volatility index, a gauge of investor anxiety, closed to a two-week low of 22.79 but stayed above its long-term average of about 20.

The Dow Jones Industrial Average rose 377.19 points, or 1.19%, to 32,151.71, the S&P 500 gained 61.18 points, or 1.53%, to 4,067.36 and the Nasdaq Composite added 250.18 points, or 2.11%, to 12,112.31.

For the week, the Dow advanced 2.7%, the S&P 500 climbed 3.6% and the Nasdaq gained 4.1%.

U.S. equity funds recorded outflows of $11.5 billion in the week to Wednesday, their largest outflow in 11 weeks, Bank of America (NYSE:BAC) Merrill said on Friday.

Volume on U.S. exchanges was 9.91 billion shares, compared with the 10.24 billion average for the full session over the last 20 trading days.

Kroger (NYSE:KR) Co jumped 7.4% after the grocer raised its annual forecast.

Shares of Tapestry (NYSE:TPR) Inc rose 2.7% after the luxury handbag maker said it expects revenue of $8 billion by fiscal year 2025.

Advancing issues outnumbered declining ones on the NYSE by a 5.14-to-1 ratio; on Nasdaq, a 2.58-to-1 ratio favored advancers.

The S&P 500 posted seven new 52-week highs and no new lows; the Nasdaq Composite recorded 47 new highs and 63 new lows.

Wall Street scores first weekly gain since mid-August
 

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Comments (6)
elliot trach
elliot trach Sep 09, 2022 9:28PM ET
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What's with the advertisements?
Rudolph Docauer
Rudolph Docauer Sep 09, 2022 4:25PM ET
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All the economies around the world are in the toilet and the Fed is busy pumping up this market. Expect a big dump soon.
Brad Albright
Brad Albright Sep 09, 2022 4:25PM ET
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In your mind quantitative tightening and raising interest rates constitutes pumping up the market?
Dave Jones
Dave Jones Sep 09, 2022 3:23PM ET
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wall street going up as wall street goes up based on wall street going up
Steven ML
Steven ML Sep 09, 2022 12:42PM ET
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deadliest cattiest bounce incoming!
Shamo Nestor
Shamo Nestor Sep 09, 2022 11:08AM ET
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The market gain because of the Queen death
irfan ameer
irfan ameer Sep 09, 2022 9:41AM ET
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Stupidity at its finest.
 
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