Stocks closed higher Friday, with the S&P 500 gaining for four weeks in a row. Signs that inflation has cooled have been a positive force for markets this week.
The
Dow Jones Industrial Average
closed 424 points, or 1.3%, higher Friday, while the
S&P 500
gained 1.7% and the tech-heavy
Nasdaq Composite
rose 2.1%.
All three major indexes scored winning weeks, too. The S&P 500 and Nasdaq have gained for four straight weeks, while the Dow has been up three of the past four weeks.
Data released this week suggests that inflation may have peaked, allowing the Federal Reserve to be less aggressive when boosting interest rates. Tom Essaye, founder of Sevens Report Research, said Friday that the S&P 500’s current level reflects that growing sentiment.
Still, the fight against rising prices isn’t over, officials at the Federal Reserve said.
San Francisco Fed President Mary Daly said Thursday that July’s inflation data are “significant in that they are saying that we’re seeing some improvement but they’re not victory.” Daly added that her base case calls for an interest-rate hike of 50 basis points, or half of a percentage point, when the Fed meets in September. The Fed president told Bloomberg she was open to another large increase if necessary.
Richmond Fed President Thomas Barkin told CNBC Friday that the central bank was “happy to see inflation start to move down,” but he’d like to see “a period of sustained inflation under control.”
“Until we do that, I think we’re just going have to continue to move rates into restrictive territory,” Barkin added.
CME FedWatch indicates that 57.5% of investors are anticipating the Fed will boost rates by 50 basis points in September and 42.5% expect a 75-point hike. Earlier this month, investors predicted a 68% chance of a 75-point hike.
Economic data released on Friday could also be helping push stocks higher. The Bureau of Labor Statistics reported that U.S. import prices decreased 1.4% in July after advancing in June, which was more than economists’ estimates of a 0.9% decline.
Jeffrey Roach, chief economist at LPL Financial, said the decline in prices provide the theory that inflation has peaked. He pointed to the continuing decline of imported food and beverage prices as additional evidence of the “beginning of a long process of overall price normalization.”
The University of Michigan’s consumer sentiment index released Friday moved up about five index points above the all-time low reached in June. Those lows arrived while consumers were dealing with red-hot inflation and rising interest rates. The report also showed that over the next five to 10 years consumers are expecting inflation to run at 3%.
Moving forward into the upcoming weeks, Michael Weisz, Founder of Yieldstreet, said on Friday that he anticipates market volatility will continue “especially as positive catalysts appear to have been priced in.”
Here are some stocks that were on the move Friday:
Shares of
Illumina
(ticker: ILMN) sank 8.4% after the gene-sequencing company cut its earnings guidance for the full year. Second-quarter adjusted earnings also missed analysts’ estimates.
Poshmark
(POSH) declined 8.4% after the online marketplace issued a revenue forecast that was weaker than expected.
The technology platform for restaurants,
Toast
(TOST) climbed 7.3% after raising full-year guidance and posting better-than-expected second-quarter results.
Peloton Interactive
(PTON) said on Friday that it is cutting nearly 800 jobs as part of a strategic overhaul. The at-home fitness company’s stock was 14% higher.
Write to Joe Woelfel at joseph.woelfel@barrons.com and Angela Palumbo at angela.palumbo@dowjones.com
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