Wall Street ends higher, notching weekly gains
NEW YORK, Oct 22, (AP): Wall Street capped a volatile run for stocks with a broad rally Friday, contributing to sizable weekly gains for major indexes.
The S&P 500 rose 2.4% and notched its biggest weekly gain since June. The Dow Jones Industrial Average rose 2.5% and the Nasdaq composite ended 2.3% higher.
More than 90% of the stocks in the benchmark S&P 500 index rose. Technology stocks, retailers and health care companies powered a big share of the rally. Oracle rose 5%, Home Depot added 2.3% and Pfizer rose 4.8%.
Social media companies fell broadly after Snapchat’s parent company issued a weak forecast and the Washington Post reported that Elon Musk plans to slash about three-quarters of the payroll at Twitter after he buys the company. Snap slumped 28.1% and Twitter shed 4.9%.
Fresh signals
Markets have been unsettled in recent days, as stocks lurched from sharp gains early in the week to losses later in the week. The market appeared headed for another sell-off early Friday, then reversed course amid fresh signals from the Federal Reserve that it may consider easing up on its aggressive pace of interest rate hikes as it tries to bring down inflation.
“The hope is that they at least slow down,” Jay Hatfield, CEO of Infrastructure Capital Advisors.
The Fed is expected to raise interest rates another three-quarters of a percentage point at its upcoming meeting in November. Markets have been unsettled partly because investors have been hoping that any sign of inflation easing or economic growth slowing could signal that the Fed will ease up on its rate increases, which have yet to show any signs of significantly impacting inflation.
Mary Daly, president of the Federal Reserve Bank of San Francisco, said Friday that she’s thinking about the dangers of raising interest rates too high and doing too much damage to the economy.
While the Fed likely isn’t yet ready to start dialing down the size of its rate hikes, she said, “I think the time is now to start talking about stepping down. The time is now to start planning for stepping down.”
If the Fed does come out of its meeting next month with a fourth straight increase of 0.75 percentage points to its key overnight interest rate, as most investors expect, she said: “I would really recommend people don’t take that away as: It’s 75 forever.”
A 0.75 point jump is triple the size of the Fed’s usual move, and the Fed risks creating a recession if it moves too high or too quickly.
Daly’s comments helped push down investors’ expectations for how high the Fed will hike rates through the end of the year. Traders are now pricing in just a 45% chance that the Fed will hike rates by 0.75 percentage points next month and again by the same amount in December.
Just a day ago, they were much more confident about that, pricing in a 75% probability. Instead, traders increasingly see the Fed dialing down to a more modest increase of 0.50 percentage points in December, according to CME Group.
Daly was speaking at meeting of the University of California-Berkeley’s Fisher Center for Real Estate & Urban Economics’ Policy Advisory Board.