Wall Street scores first weekly gain since mid-August

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  • Focus on US inflation data next week
  • Kroger rises on higher forecast
  • Analysts attribute rise to oversold condition

Sept 9 (Reuters) – US stocks rallied on Friday, with the major indexes recording their first weekly gain in four weeks as investors went back on a buying spree, shrugging off concerns about the economic outlook.

The gains followed a sharp sell-off that began in mid-August, triggered by concerns about the impact of tighter monetary policies and signs of an economic slowdown in Europe and China.

Analysts said this week’s market recovery was more related to previous overselling. Uncertainty remains high about inflation and the Federal Reserve’s aggressiveness in interest rate hikes.

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“It’s not surprising we get a little bit of a bounce like we’re getting here, as a lot of this is technical,” said Jack Janasiewicz, lead portfolio strategist and portfolio manager at Natixis Investment Managers Solutions.

“I wouldn’t be shocked if we started the week off with a little bit more strength and then we sort of settle down and give back a little bit as we get ready for the CPI,” he added, looking ahead to next week.

Investors awaited August’s consumer prices (CPI) report on Tuesday for any signs that inflation may be easing. It is expected to show that prices rose at an 8.1% pace over the year in August, compared with 8.5% in July.

Wells Fargo economists expect headline inflation to log its steepest monthly decline since the peak of the pandemic in April 2020, helped by a pullback in gas prices.

All 11 major S&P sectors traded higher on Friday, with communication services (.SPLRCL), technology (.SPLRCT), energy (.SPNY) and consumer discretionary (.SPLRCD) leading the way.

Hammered since the beginning of the year over concerns of higher interest rates, high-growth stocks rose in the week.

Fed Chair Jerome Powell said on Thursday that the US central bank is “strongly committed” to controlling inflation but there remains hope it can be done without the “very high social costs” involved in prior inflation fights. read more

Several other Fed policymakers have also reiterated their commitment to fighting runaway inflation in recent weeks, making investors jittery about the prospects of another outsized interest rate hike from the Federal Reserve. read more

Traders are pricing in a 90% chance of a 75 basis point rate hike at the next meeting, up from 57% a week earlier, according to CME Group’s Fedwatch Tool.

The CBOE volatility index (.VIX), a gauge of investor anxiety, fell to a two-week low of 22.85 but stayed above its long-term average of about 20.

According to preliminary data, the S&P 500 (.SPX) gained 61.44 points, or 1.53%, to end at 4,067.62 points, while the Nasdaq Composite (.IXIC) gained 249.94 points, or 2.12%, to 12,113.19. The Dow Jones Industrial Average (.DJI) rose 384.54 points, or 1.21%, to 32,157.88.

US equity funds recorded outflows of $11.5 billion in the week to Wednesday, their largest outflow in 11 weeks, BofA said on Friday.

Kroger Co (KR.N) jumped after the grocer raised its annual forecast.

Shares of Tapestry Inc (TPR.N) also rose after the luxury handbag maker said it expects revenue of $8 billion by fiscal year 2025.

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Reporting by Carolina Mandl, additional reporting by Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Anil D’Silva, Maju Samuel and Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

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