Wall Street closed higher, posting a weekly gain as the Fed meeting approaches

NEW YORK (Reuters) – Wall Street rallied on Friday, ending a difficult week as economic data and corporate earnings guidance pointed to softening demand as well as economic resilience ahead of the Federal Reserve’s monetary policy meeting next week.

The three major US stock indices ended the session in the green, with the Nasdaq, supported by huge momentum stocks, enjoying the biggest gains.

From last Friday’s close, the S&P and Dow posted their third weekly gains in four, while the tech-laden Nasdaq posted its fourth consecutive weekly advance.

So far in the first weeks of 2023, the Nasdaq has jumped 11%, while the S&P 500 and Dow are up 6% and 2.5%, respectively.

“It’s a nice end to another strong week to what is shaping up to be a historic strong month,” said Ryan Detrick, chief market strategist at Carson Group in Omaha. “It’s the realization that inflation continues to decline rapidly and that alleviates a lot of concerns about the economy.”

The highly anticipated Personal Consumption Expenditures (PCE) report from the Commerce Department arrived largely in line with the consensus, showing softening demand and lowering inflation – exactly what the Fed aims to achieve by raising restrictive interest rates.

“(The PCE report) is another building block for the inflation data that we’ve been seeing lately,” Detrick added. “Supply chains continue to open up and improve, opening the door for the Fed to end the cycle of aggressive rate hikes.”

Federal Reserve Chairman Jerome Powell has clearly stated that the central bank’s battle against high inflation for decades is far from over. Financial markets still believe the central bank will raise the federal funds target rate by another 25 basis points at the close of next week’s policy meeting.

Fourth-quarter earnings season continues in all kinds of ways, as 143 companies in the S&P 500 report. Of those, 67.8% beat Street’s expectations, slightly better than the 66% long-term average, but well below the 76% win rate over the four quarters. past, according to Refinitiv.

Analysts now see the S&P 500’s overall earnings falling 2.9% year over year, compared to a moderate annual decline of 1.6% on Jan. 1, according to Refinitiv.

Dow Jones Industrial Average (.DJI) The S&P 500 rose 28.67 points, or 0.08%, to 33,978.08. (.SPX) rose 10.13 points, or 0.25%, to 4,070.56, the Nasdaq Composite (nineteenth) It added 109.30 points, or 0.95%, to 11,621.71 points.

Among the 11 major sectors in the S&P 500, as measured by consumer discretion (.SPLRCD) Gainer percentage topped while energy (.SPNY) The biggest loss is 2%.

Shares of Intel Corp (INTC.O) It fell 6.4% after the chip maker made a dismal earnings forecast.

Chevron Corporation (CVX.N) It posted record earnings for 2022, but fourth-quarter earnings fell short of expectations, sending the stock down 4.4%.

Competing payment companies American Express (AXP.N) and Visa Inc (VN) Results announced exceeded consensus, easing fears 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, there are a series of high-profile earnings reports, notably from Apple Inc. (AAPL.O)Amazon.com (AMZN.O)Alphabet Inc (GOOGL.O) and meta platforms (META.O)among others.

Advance issues outnumbered declining issues on the NYSE by a ratio of 1.40 to 1; On the Nasdaq, a ratio of 1.34 to 1 favored gainers.

The S&P 500 hit a new 52-week high and there were no new lows. The Nasdaq index posted 94 new highs and 32 new lows.

Trading volume on US stock exchanges reached 11.88 billion shares, compared to an average of 11.10 billion over the last 20 trading days.

Reporting by Stephen Kolb. Additional reporting by Bansari Mayur Kamdar, Yohan M. Cherian and Shriyashi Sanyal in Bengaluru; Edited by Aurora Ellis

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