Wall Street’s primary indices closed with substantial gains on Friday, driven by robust performances from prominent technology and growth stocks, coupled with a stabilization in Treasury yields.
Investors were also eagerly anticipating next week’s reports on inflation and other economic indicators.
The tech-focused Nasdaq Composite saw its most significant one-day percentage increase since May 26.
This surge marked a strong rebound from the previous session’s decline, which had been triggered by Federal Reserve Chair Jerome Powell’s hawkish comments regarding interest rates.
Thursday’s setback had put an end to the S&P 500 and Nasdaq’s longest winning streaks in two years.
Investors had been closely monitoring benchmark Treasury yields, which had recently retreated somewhat from their 16-year highs.
They were also keeping a close eye on monetary policy, speculating on whether the Fed would continue raising rates to combat inflation or start considering rate cuts.
Chuck Carlson, CEO at Horizon Investment Services, noted, “We have had rates roll over here a little bit, and I think that’s one of the reasons we have seen this rally over the last couple of weeks.
If you think this rally has legs, yesterday gave you an opportunity to go buy some stocks today.”
Next week, investors would be paying close attention to the consumer price index report, along with data on producer prices and retail sales, which would further shape interest rate expectations.
“In general, the expectation investors have is that the upcoming inflation data is going to be positive for the market, and I think they want to get in front of it a little bit,” said Rick Meckler, a partner at Cherry Lane Investments.
On Friday, the Dow Jones Industrial Average surged 391.16 points, or 1.15%, reaching 34,283.1, while the S&P 500 gained 67.89 points, or 1.56%, closing at 4,415.24.
The Nasdaq Composite showed impressive strength, surging by 276.66 points, or 2.05%, to reach 13,798.11. The S&P 500 achieved its highest closing level since September 19.
All 11 sectors within the S&P 500 ended the day in positive territory, with the technology sector leading the way with a 2.6% gain.
Megacap tech stocks, which have been instrumental in propelling the market higher this year, also performed well, with companies like Nvidia, Meta Platforms, and Microsoft posting gains.
Investors seemed to view megacap tech stocks as a safe haven in an environment of rising interest rates and a slowing economy, willing to pay a premium for these companies.
For the week, the Dow rose about 0.7%, the S&P 500 gained 1.3%, and the Nasdaq climbed 2.4%.
Additionally, the yield on the benchmark 10-year Treasury note remained relatively stable at 4.62%, following a recent jump partially attributed to a weaker-than-expected 30-year bond auction.
Despite this positive momentum in the stock market, data on Friday revealed a fourth consecutive monthly decline in U.S. consumer sentiment for November, coupled with rising inflation expectations among households.
In corporate news, shares of Illumina dropped 8% as the genetic testing company reduced its full-year profit forecast for the second consecutive quarter.
Advancing issues outnumbered decliners on the NYSE by a ratio of 2.7-to-1, with 70 new highs and 152 new lows.
On the Nasdaq, advancing issues surpassed decliners by a ratio of 1.6-to-1, with 61 new highs and 353 new lows.
Trading volume on U.S. exchanges reached approximately 10.2 billion shares, slightly below the 20-session daily average of around 11 billion shares.