Stocks rise on Wall Street, but remain down for the week

Stocks are broadly higher in afternoon trading on Wall Street Friday following 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. It was a welcome update 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 1.7% as of 3:28 p.m. Eastern, on pace to snap a five-day losing streak. Still, the gains still weren’t enough to pull stocks out of the red for the week and the benchmark index is still headed for a 1.2% drop.

The Dow Jones Industrial Average rose 570 points, or 1.9%, to 31,200 and the Nasdaq rose 1.5%. Both indexes are also headed for a weekly loss.

Technology stocks, banks and healthcare companies made some of the biggest gains. PayPal climbed 5.5%. United Health Group rose 5% after raising its profit forecast for the year following a strong earnings report. Citigroup jumped 14% after reporting encouraging financial results.

Smaller company stocks rose more than the broader market. The Russell 2000 was 2% higher.

Bond yields mostly fell. The yield on the 10-year Treasury slipped to 2.93% from 2.96% late Thursday. The yield on the two-year Treasury, which had been rising prior to the release of the latest report on consumer sentiment, was unchanged at 3.13%.

Inflation and its impact on businesses and consumers remains a key focus for Wall Street. The Federal Reserve has been raising interest rates in an effort to hit the brakes on economic growth, and curtail rising inflation. The Fed has already raised rates three times this year.

Wall Street has been worried that the Fed could go too far in raising rates and actually bring on a recession. Investors have been closely watching economic reports for clues as to how the central bank might react and the latest upbeat consumer sentiment report raises the chance of the Fed softening its current policy.