Wall Street’s major indexes saw gains on Friday as investors evaluated the hawkish remarks made by Federal Reserve Chair Jerome Powell and anticipated important economic data to provide more clues on the direction of monetary policy next week.
Powell stated on Thursday that policymakers at the central bank “are not confident” that interest rates are now high enough to defeat inflation and that they would not think twice about tightening policy further if necessary.
The greatest winning run on the Nasdaq and the S&P 500 in two years came to an end due to the hawkish remarks. Prior to this, investors had been hoping that the Fed would finish its cycle of rate hikes after it had left rates steady at its most recent meeting.
The theme of ‘higher for longer’ is more likely to materialise, based on yesterday’s statements. That is the drawback, according to AXS Investments CEO Greg Bassuk.
Positively, investors have witnessed robust economic growth and solid earnings. Therefore, all eyes are on any more economic data or remarks made by the Fed that may provide more insightful information about the future course of the economy and the markets.”
The yield on the benchmark 10-year Treasury note decreased to 4.6043% on Friday, which helped markets.
Apple, Tesla, and Nvidia were among the megacap growth companies that had gains, ranging from 0.5% to 1.4%.
Nine of the eleven main S&P 500 sectors had increases, with information technology leading the way at 0.9%.
According to the CME Group’s FedWatch tool, traders are currently pricing in a roughly 68% possibility of a rate decrease by the Fed at the June meeting, compared with bets of a cut in May prior to Powell’s speech.
Despite the lack of economic data this week, investors will get updates on producer and consumer prices as well as retail sales the next week. These reports will help to further define expectations for interest rates ahead of the Fed’s meeting in December.
The S&P 500 was up 12.72 points, or 0.29%, at 4,360.07, while the Dow Jones Industrial Average was up 50.32 points, or 0.15%, at 33,942.26, at 10:02 a.m. ET.
The third-quarter sales projections for Unity Software, a manufacturer of gaming software, were missed, causing a 2.7% decline in its shares, among others.
Plug Power fell 34.1% after the manufacturer of hydrogen fuel cells expressed concerns over its viability.
For the second consecutive quarter, Illumina’s shares fell 14.1% as the gene-testing business lowered its full-year earnings projection.
The sub-index of S&P 500 health declined by 0.6%.
On the NYSE, the ratio of advancing issues to declining ones was 1.74 to 1, while on the Nasdaq, it was 1.16 to 1.