Technical data

Wall Street closes on inflation data

NOT FINISHED:
The S&P 500 has regained half of its losses since falling from a record high in January, which could signal a bull market, but one analyst said bad news is likely “always out there”.

Wall Street closed higher on Friday as signs that inflation may have peaked last month boosted investor confidence in the possibility of a bull market, prompting the S&P 500 and NASDAQ to post their fourth straight week. of earnings.

The S&P 500 is up 17.7% from a mid-June low, with the latest gains coming from this week’s data showing a slower-than-expected rise in the consumer price index and a decline producer price surprise last month.

The S&P 500 broke through a closely watched technical level of 4,231 points, indicating that the benchmark has recouped half of its losses since falling from an all-time high in January.

A 50% retracement for some signals a bull market.

“It’s really just a number, but it certainly makes investors feel better – at least those who bought near the bottom,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

“I wouldn’t declare victory in this bear market just yet. There’s probably still bad news, but chances are we’ve seen the bottom,” Ghriskey said.

The Dow Jones Industrial Average rose 424.38 points, or 1.27%, to 33,761.05, while the S&P 500 gained 72.88 points, or 1.73%, to 4,280.15 and the NASDAQ Composite added 267.27 points, or 2.09%, to 13,047.19.

For the week, the S&P 500 gained 3.26%, the Dow Jones rose 2.92% and the NASDAQ gained 3.08%.

Volume on U.S. exchanges was 9.99 billion shares, compared to an average of 11.04 billion for the full session over the past 20 trading days.

As the S&P 500 and NASDAQ posted their longest weekly winning streaks since November last year, analysts said the US Federal Reserve still had work to do as it sought to tame inflation by aggressively raising interest rates without triggering a recession.

“Markets certainly got some great inflation news this week,” said Dec Mullarkey, managing director of investment strategy and asset allocation at SLC Management in Boston.

“A victory lap in some respects was in order, but it’s by no means ‘mission accomplished’. It’s still very slow in coming,” Mullarkey said.

Inflation by the end of the year could decelerate to 7% or a little less, but underlying inflation below 4%, double the Fed’s target, will probably be more difficult than the markets anticipate it, Mullarkey said.

Traders are banking on a less hawkish Fed, with fed funds futures showing a 55.5% chance that Fed policymakers will raise rates by 50 basis points at their meeting next month, instead of of 75 basis points.

It was a sea of ​​green on Wall Street for a second day in a row, with all 11 major S&P 500 sectors up, along with Dow semiconductors, small caps and transportation. Growth stocks rose 2.1%, while value rose 1.4%.

Investors bought $7.1 billion worth of stocks in the week ending Wednesday, with U.S. growth stocks seeing their biggest weekly inflow since December last year, Bank of America said in a rating.

Data showing U.S. consumer confidence improved further this month after hitting a record low this summer also fueled optimism, and the near-term inflation outlook for U.S. households has eased again. due to lower gasoline prices.

After a tough start to the year, better-than-expected second-quarter earnings for US companies supported bullish sentiment for US equities.

Overall, analysts estimate the S&P 500 posted year-over-year earnings growth of 9.7% in the April-June period, much stronger than the 5.6% forecast by Refinitiv at the end. of the quarter.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 4.43 to 1; on the NASDAQ, a ratio of 2.76 to 1 favored advances.

The S&P 500 posted five new 52-week highs and 29 new lows, while the NASDAQ Composite posted 78 new highs and 39 new lows.

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