US Stocks End Turbulent Week With a Hefty Gain: Markets Wrap
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(Bloomberg) -- US stocks ended a turbulent week with a sizable gain as Apple Inc.’s earnings report buoyed technology shares and a smattering of economic data suggested a modicum of progress is being made in the Federal Reserve’s battle against inflation.
The S&P 500 and the tech-heavy Nasdaq 100 notched their longest weekly rising streak since August. Gains in big-tech companies including Microsoft Corp. and Google parent Alphabet Inc. helped both indexes snap a two-day decline on Friday.
Treasuries turned weaker on Friday, breaking a three-day rally after hopes of a Fed pivot fizzled. The dollar rose for a second straight session.
Stocks, bonds and the dollar whipsawed this week as investors attempted to make sense of conflicting earnings reports and economic data.
Quarterly reports from megacap technology firms underscored the impact of the Fed’s tightening regime, and consequently the surging dollar. But overall, earnings still largely beat estimates, with Caterpillar Inc., which is considered a bellwether firm, highlighting strong buyer demand.
“This result season is turning out to be quite a strong result season, just like the second quarter was,” Anik Sen, global head of equities at PineBridge Investments, said by phone. “As you can see, the rally is very broad-based. It’s not necessarily stock specific. What’s moving the market is basically valuation. And the valuation is being teed off expectations of where the Fed is going land.”
Meanwhile, a core gauge of US inflation accelerated in September, bolstering the Fed’s case for another jumbo rate hike next week. But a contraction in manufacturing and services, and lower-than-expected US home sales, indicated that the Fed’s actions are already hitting the economy. Gross domestic product data, which came in on Thursday, briefly assuaged concerns of an imminent recession.
Economists are still expecting the Fed to raise rates by three-quarters of a percentage point for the fourth time in a row next week. Rates are projected to rise another half point in December, then by quarter points the following two meetings.
“It is too early to expect the Fed to signal a more dovish stance,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “We maintain our view for economic growth to bottom out in the middle of 2023 and for the Fed to stop hiking in 1Q23.”
Seeds of a Stock Market Recovery Sown in Tech’s Catastrophe Week
Beyond the US
US investors also closely watched the actions of other central banks for possible hints about the Fed’s path ahead.
While the European Central Bank delivered a second straight 75 basis-point hike on Thursday, it dropped a prior reference to rate increases continuing for “several meetings,” an outcome that was considered dovish. On Wednesday, the Bank of Canada announced a smaller-than-expected rate hike, which briefly stoked speculation that the Fed could follow suit.
The Bank of Japan, meanwhile, stood by its ultra-low interest rates at the end of a two-day long policy meeting on Friday.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 2.5% as of 4 p.m. New York time
- The Nasdaq 100 rose 3.2%
- The Dow Jones Industrial Average rose 2.6%
- The MSCI World index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro was little changed at $0.9965
- The British pound rose 0.4% to $1.1617
- The Japanese yen fell 0.8% to 147.44 per dollar
Cryptocurrencies
- Bitcoin rose 1.1% to $20,620.71
- Ether rose 2% to $1,558.63
Bonds
- The yield on 10-year Treasuries advanced seven basis points to 3.99%
- Germany’s 10-year yield advanced 14 basis points to 2.10%
- Britain’s 10-year yield advanced eight basis points to 3.48%
Commodities
- West Texas Intermediate crude fell 1.1% to $88.13 a barrel
- Gold futures fell 1% to $1,648.40 an ounce
--With assistance from , and .
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