Wall Street clinches 1st winning week in a month

NEW YORK – Stocks rose Friday to send Wall Street to its first winning week since July after the head of the Federal Reserve said it will “proceed carefully” as it decides what to do with interest rates.

The S&P 500 climbed 29.40, or 0.7%, to 4,405.71 after flipping between small gains and losses a few times through the day. The Dow Jones Industrial Average rose 247.48 points, or 0.7%, to 34,348.90, and the Nasdaq composite gained 126.67, or 0.9%, to 13,590.65.

In a highly anticipated speech, Fed Chair Jerome Powell said again that it will make upcoming decisions on interest rates based on what incoming data reports say about inflation and the economy, and he made no promises about what’s coming next.

Wall Street had the speech circled on calendars because it was hoping Powell would say the Fed was done with its hikes to interest rates, which grind down inflation at the cost of slowing the economy and hurting prices for investments.

Powell instead said the Fed may raise interest rates again, if needed. Even though inflation has come down from its peak last summer, Powell said it’s still too high.

But he also took care to say he’s aware of the risks of going too far on interest rates and doing “unnecessary harm to the economy.” Altogether, the comments weren’t very different from what Powell said before, analysts said.

But one word of Powell’s stood out to Brian Jacobsen, chief economist at Annex Wealth Management, particularly as it relates to Powell’s speech last year at the same Fed event. That 2022 speech caused stocks to fall sharply.

“Carefully is the new forcefully,” Jacobsen said. “Last year, Powell said the Fed would respond forcefully, and they sure did. Now they can tread carefully. Any adjustments to rates now will be more like finetuning.”

The Fed has already hiked its main interest rate to the highest level since 2001 in its drive to grind down high inflation. That was up from virtually zero early last year.

The much higher rates have already sent the manufacturing industry into contraction and helped cause three high-profile U.S. bank failures during the spring. They’ve also helped to slow inflation, but a string of stronger-than-expected reports on the economy has raised worries that upward pressure remains. That could force the Fed to keep rates higher for longer.

Such expectations in turn vaulted the yield on the 10-year Treasury this week to its highest level since 2007. It ticked down to 4.23% from 4.24% late Thursday, though it’s still up sharply from less than 0.70% three years ago.

High yields mean bonds are paying more in interest to investors. They also make investors less likely to pay high prices for stocks and other investments that can swing more sharply in price than bonds. Big Tech and other high-growth stocks tend to feel such pressure in particular.

Gold for December delivery fell $7.20 to $1,939.90 an ounce. Silver for September delivery was unchanged at $24.23 an ounce and September copper fell 1 cent to $3.76 a pound.

The dollar rose to 146.35 Japanese yen from 145.86 yen. It fell to $1.0807 to $1.0810 against the euro.