Rally on Wall Street closes out week

Inflation news, China’s easing on COVID policy spur gains

NEW YORK — Wall Street piled more gains Friday onto its mammoth rally from a day earlier to close out its best week since the summer.

The S&P 500 rose 0.9 percent a day after soaring

5.5 percent for its best day in more than two years.

The Dow Jones Industrial Average added 32 points to its surge of more than 1,200 from a day earlier, while the Nasdaq composite jumped 1.9 percent.

Markets got a boost after China relaxed some of its strict ANTI-COVID measures, which have been hurting the world’s second-largest economy.

The main reason for this week’s euphoria in markets was a report on Thursday showing inflation in the United States slowed by more than expected last month. That raised hopes the worst of inflation may have passed and the Federal Reserve can be less aggressive about raising interest rates to get it under control. But analysts cautioned high inflation could be slow to fall.

What the Fed does with rates is crucial for Wall

Street because hikes slow the economy and can cause a recession, all while dragging down on stock prices.

Perhaps just as important as how bad inflation is at the moment is how high

U.S. households see it being in future years. That’s because too-high expectations can trigger a vicious cycle in which people accelerate purchases and make other moves that inflame inflation further.

The Fed has said preventing such a doom loop is one of the reasons it’s moved so aggressively on rate hikes.

The median expectation for inflation in the coming year among households rose to 5.1 percent from 5 percent a month earlier, according to a survey by the University of Michigan. Expectations for long-run inflation, meanwhile, ticked up to 3 percent. But that is still within the same 2.9 percent to 3.1 percent range where they’ve been for 15 of the past 16 months.

High inflation helped knock down the survey’s reading for overall consumer sentiment by more than economists expected.

“The consumer is laser-focused on inflation and they’re feeling it every day,” said Brian Price, head of investment management at Commonwealth Financial Network. “I wouldn’t expect that we see any upside with regard to consumer sentiment until inflation comes under control.”

The Fed has already lifted its overnight interest rate to a range of 3.75 percent to 4 percent, up from basically zero in March.

Bond markets were closed for trading in observance of Veterans Day. On Thursday, yields plunged as investors pared their expectations for how aggressively the Fed will raise rates.

The S&P 500 rose 36.56 points to 3,992.93, and its 5.9 percent gain for the week was its third in the last four and its biggest since June. The Dow rose 32.49, or 0.1 percent, to 33,747.86, and the Nasdaq climbed 209.18, or 1.9 percent, to 11.323.33.