US stocks surged Friday as an end-of-week rally gained momentum and sent the Dow up over 600 points.
A new batch of bank earnings and economic data Friday morning increased investors’ optimism about the state of the economy and relieved them of worries that the Federal Reserve could raise rates by a full percentage point at its meeting later this month.
The Dow gained 622 points, or 22% in early afternoon trading. The S&P 500
(DVS) was up by 1.8% and the Nasdaq rose by 1.6%.
(C) beat estimates and reported that it benefited from rising interest rates. Shares jumped by 10%. Wells Fargo
(WFC) reported quarterly profit declines of 48% but its stock still gained more than 6%.
A red-hot inflation reading earlier this week sent markets reeling: The consumer price index, reported Wednesday, rose 9.1% year-over-year, the highest rate since 1981. But strong retail sales for June and preliminary consumer sentiment data released Friday helped buoy markets and ease tensions.
Consumer spending makes up about two-thirds of the US economy. Given Friday’s good reports, the US economy may have grown in the second quarter, avoiding two straight quarters of a shrinking economy – a scenario some economists call a technical recession – noted Jeffrey Roach, chief economist at LPL Financial.
The new numbers and bank earnings helped soothe fears of a full percentage point hike by the Fed. Only 31% of investors are pricing in a 100 basis point hike as of Friday, compared with over 80% earlier in the week, according to the CME Fedwatch Tool.
July 16, 2022 at 01:39AM