By Stephen Culp
NEW YORK (Reuters) - Wall Street advanced on Friday, marking the end of an rocky week in which economic data and corporate earnings guidance 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 ended the session green, with the Nasdaq, powered by megacap momentum stocks, enjoying the biggest gain.
From last Friday's close, the S&P and the Dow posted their third weekly gains in four, while the tech-laden Nasdaq notched its fourth straight weekly advance.
So far in the early weeks of 2023, the Nasdaq has jumped 11%, while the S&P 500 and the Dow have gained 6% and 2.5%, respectively.
"It's a nice end to another solid week of what's shaping up to be a historically strong month," said Ryan Detrick, chief market strategist at Carson Group in Omaha. "It's a realization that inflation continues to come down quickly and that is alleviating a lot of worries regarding the economy."
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 another building block to the inflation data we’ve been seeing recently," Detrick added. "Supply chains continue to open up and improve, opening the door for the Fed to end its aggressive rate hiking cycle."
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 rose 28.67 points, or 0.08%, to 33,978.08, the S&P 500 gained 10.13 points, or 0.25%, to 4,070.56 and the Nasdaq Composite added 109.30 points, or 0.95%, to 11,621.71.
Among the 11 major sectors of the S&P 500, consumer discretionary led the percentage gainers, while energy suffered the largest percentage loss, down 2%.
Shares of Intel Corp (NASDAQ:INTC) plunged 6.4% after the chipmaker provided dismal earnings projections.
Chevron Corp (NYSE:CVX) posted record 2022 profit, but its fourth quarter earnings fell short of expectations, dragging the stock down 4.4%.
Rival payment companies American Express Co (NYSE:AXP) and Visa Inc (NYSE:V) reported consensus-beating results, easing worries of waning consumer demand. There shares jumped 10.5% and 3.0%, respectively.
Next week, in addition to the Fed meeting and January employment data, a string of high profile earnings reports are on tap, notably from Apple Inc (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL) Inc and Meta Platforms, among others.
Advancing issues outnumbered declining ones on the NYSE by a 1.40-to-1 ratio; on Nasdaq, a 1.34-to-1 ratio favored advancers.
The S&P 500 posted 15 new 52-week highs and no new lows; the Nasdaq Composite recorded 94 new highs and 32 new lows.
Volume on U.S. exchanges was 11.88 billion shares, compared with the 11.10 billion average over the last 20 trading days.