Stock market rises with S&P 500 and Nasdaq up more than 6% this week

The S&P 500 rose on Friday, posting its best week of the year and taking a brutal streak of losses that nearly ended its bull market.

A large number of earnings results and economic data boost optimism among investors in recent sessions, helping to pull major indexes away from this year’s lows. A broad rally, with all 11 S&P 500 groups rising, helped the index break a seven-week losing streak. The three major indices jumped at least 6% this week, which hasn’t happened since November 2020.

On Friday, new data showed that US households boosted spending for the fourth straight month, though Reached deep in savings Let’s do it. Meanwhile, the closely watched US inflation reading eased in April. The data, along with some solid earnings, drove retailer stocks sharply higher.

dollar treeAnd the

Ulta Beauty And the Ross Stores It was among the biggest winners this week in the S&P 500, each earning at least 20%.

Meanwhile, US consumers seem reluctant to let high gas prices and travel costs keep them away from Memorial Day weekend plans, and are expected to continue to support the economy.

For months, concerns about high inflation and the path Fed rate increase affected the market. Investors are increasingly concerned that raising interest rates could push the economy into deflation. According to Deutsche Bank, several extended cycles of interest rate hikes in recent decades have led to deflation.

Fears of this worst-case scenario appear to have subsided this week. Inventories continue to rise After the minutes of the last meeting of the Federal Reserve showed that central bank officials believe they will need to raise interest rates by half a percentage point at each of the next two meetings. Major indices built on those gains later in the week and then rose on Friday, ending the week near session highs.

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The S&P 500 gained 100.40 points, or 2.5%, to close Friday at 4,158.24. The Dow Jones Industrial Average added 575.77 points, or 1.8 percent, to 33,212.96. Technology heavy Nasdaq added 390.48 points, or 3.3%, to 12,131.13.

Some investors said stocks fell too much, too quickly. Big selling made valuations more attractive, encouraging some investors to do so buy dip.

“People hate giving up on a tactic or strategy, and it has worked so well for them,” said Steve Sosnick, chief strategist at Interactive Brokers. “We’ve seen our customers buy with determination.”

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Nearly $21 billion flowed into global equity funds in the week through Wednesday, according to a BofA Global Research analysis of EPFR data, the largest inflow in 10 weeks.

This week’s rebound provided a respite from what appeared to be a continuing blow to the governor. Last week, the Dow Jones Industrial Average It has fallen for the eighth consecutive weekits longest stretch since 1932, while the Nasdaq Composite, like the S&P 500, posted its seventh straight week of losses.

However, few investors and strategists are still willing to enter the bottom of the sell-off that has sent the S&P 500 down about 13% for the year. Some traders said the recent gains looked like a short-term rally during a broader decline.

“I think you’re going to see a lot of ‘buying dips’ and ‘selling bits,'” said Stephen Solaka, co-founder of Belmont Capital Management.

Year-round turmoil and a strong rush in recent days have left some investors wondering: Is the worst over?

Only a few of the fundamental factors that drove stocks lower this year have changed. The Fed is on its way to continue raising interest rates. Meanwhile, Covid-19 has been closed in China and war in ukraine Exacerbated supply chain crises.

Sosnik said: “I can’t count the times people have asked me, ‘Have you seen surrender? ”

Many investors say some stocks and sectors are becoming more attractive as valuations drop.


picture:

David L. Nmic / Associated Press

Some of the riskiest bets boomed this week along with the major indicators. An exchange-traded fund that tracks high-yield bonds, and

iShares iBoxx High Yield Corporate Dollar Bond FundAnd the

It has risen for five consecutive sessions, its longest winning streak since June 2021, according to Dow Jones market data. Meme like

Jim Stop

And the

AMC Entertainment Holdings

It also skyrocketed, adding 43% and 20%, respectively, this week.

Julian Stove, founder of hedge fund firm Stouff Capital in Geneva, Switzerland, said he has put in place a position that would profit if the rally continues in the near term, although he doesn’t think the sell-off is over yet. He said that market volatility has been declining recently and it appears that many investors have already abandoned their bets in the stock market.

“At the moment we are optimistic” about the short term, said Mr. Stoff.

For several weeks, investors also analyzed earnings results, many of which led to giant swings across the market. shares

Dell Technologies

Friday jumped 13% after reporting a rise in profits and a dip in some operating expenses.

Although retail stocks have impressed investors this week, other companies have reported a more somber outlook.

Explode, Explode

Executives issued an earnings warning on Monday, saying they intend to slow hiring and spending. The company’s shares are down 33% this week.

Shares of cloud HR software company

a work day

It fell 5.6% on Friday after it reported revised first-quarter earnings that came in below expectations.

There was a contrast in the behavior of Americans and how they feel about their finances, highlighting the uncertainty regarding the economy at the moment. The University of Michigan Consumer Sentiment Index fell to its lowest level since August 2011. high inflation Americans’ wallets have been undermined and fears of a recession raised, leading to low levels of confidence.

Concerns about economic growth persisted, sending government bond yields lower, far from the highs hit earlier in May. The yield on US 10-year Treasury bonds It fell to 2.748% on Friday and decreased for three consecutive weeks. Yields and prices move in opposite directions.

Oil prices rose, with Brent crude, the international benchmark, up 6.1% to $119.43 a barrel this week, the best extension in more than a month.

Abroad, the pan-continental Stoxx Europe 600 Index is up 1.4%. In Asia, Hong Kong’s Hang Seng Index rose 2.9%. Japan’s Nikkei 225 index gained 0.7%. The Shanghai Composite Index is up 0.2%.

Write to Gunjan Banerji at [email protected]wsj.com and Caitlin McCabe at [email protected]

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