Stocks stage rally but still down for week

Wall Street capped a week of losses with a broad rally for stocks Friday, as investors welcomed solid earnings from big companies and an encouraging report on consumer sentiment and inflation expectations.

A July survey from the University of Michigan showed that inflation expectations have held steady or improved, along with general consumer sentiment. The report was welcome following several government reports this week that showed consumer prices remained extremely hot in June, along with wholesale prices for businesses.

The report also bodes well for investors looking for signs that the Federal Reserve might eventually ease off its aggressive policy to fight inflation.

The S&P 500 rose 1.9 percent, snapping a fiveday losing streak. Still, the gains weren’t enough to pull the benchmark index out of the red for the week.

The Dow Jones Industrial Average rose 2.1 percent and the Nasdaq gained 1.8 percent. Smaller company stocks outgained the broader market, sending the Russell 2000 index 2.2 percent higher. Those indexes also posted losses for the week, however.

“Investors are saying, look, ‘we’ve seen this before, where the market goes up smartly one day, only to turn back around the next day,’ ” said Sam Stovall, chief investment strategist at CFRA.

Technology stocks, banks and healthcare companies made some of the biggest gains. PayPal climbed 6.3 percent. UnitedHealth Group rose 5.4 percent after raising its profit forecast for the year following a strong earnings report. Citigroup jumped 13.2 percent for the biggest gain in the S&P 500 after reporting encouraging financial results. Bond yields mostly fell. The yield on the 10-year Treasury slipped to 2.92 percent from 2.96 percent late Thursday. The yield on the two-year Treasury rose to 3.14 percent from 3.13 percent late Thursday.

Economic data also shows that retail sales remain strong. A government report showed that retail sales rose 1 percent in June from May, topping economists’ expectations, while prices for everything from food to clothing rose.

All told, the S&P 500 rose 72.78 points to 3,863.16. The index has resisted dropping below 3,800, noted Stovall.

“Whenever we come down to about 3,800 and we bounce off it, it’s a confirmation there are a lot of buyers at that level,” he said. “And we saw that yesterday as the market retested that level only to be pushed higher, and then today with encouraging fundamentals to go along with it.”