Wall Street posts first weekly gain since mid-August

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  • Focus on US inflation data next week
  • Kroger rises on higher forecast
  • Analysts attribute increase to oversold condition

Sept. 9 (Reuters) – US stocks rose on Friday, with major indices posting their first weekly gains in four weeks as investors returned to a buying frenzy and shook off concerns about the economic outlook.

Earnings followed a sharp sell-off that began in mid-August, triggered by concerns about the impact of tighter monetary policy and signs of an economic slowdown in Europe and China.

Analysts said this week’s market recovery had more to do with past overselling. Uncertainty remains high about inflation and the aggressiveness of the Federal Reserve to rate hikes.

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“It’s not surprising that we’re getting a bit of a rebound like we’re getting here, as a lot of this is technical,” said Jack Janasiewicz, lead portfolio strategist and portfolio manager at Natixis Investment Managers Solutions.

“I wouldn’t be shocked if we started the week with a little more power and then took it easy and gave back a little bit as we prepare for the CPI,” he added, looking ahead to next week.

Investors waited Tuesday for the August consumer price report (CPI) for signs that inflation could ease. Prices are expected to have increased by 8.1% during the year in August, compared to 8.5% in July.

Wells Fargo economists expect headline inflation to record the strongest monthly decline since the pandemic peaked in April 2020, aided by a slump in gas prices.

All 11 major S&P sectors closed higher on Friday, with communications services (.SPLRCL), technology (.SPLRCT), energy (.SPNY) and consumer discretionary (.SPLRCD) leading the way.

Hammered since the start of the year on concerns about higher interest rates, high-growth stocks rose in the week.

Fed Chair Jerome Powell said on Thursday the US central bank is “strongly committed” to controlling inflation, but hopes remain that it can be done without the “very high social costs” associated with past inflation battles. read more

Several other Fed policymakers have also reiterated in recent weeks their commitment to fighting runaway inflation, making investors nervous about the prospects of another excessive rate hike by the Federal Reserve. read more

Traders are counting on a 90% chance of a 75 basis point rate hike at the next meeting, up from 57% a week earlier, according to CME Group’s Fedwatch Tool.

The CBOE Volatility Index (.VIX), a gauge of investor fear, fell to a two-week low of 22.85, but remained above its long-term average of about 20.

According to preliminary data, the S&P 500 (.SPX) gained 61.44 points, or 1.53%, to finish at 4,067.62 points, while the Nasdaq Composite (.IXIC) gained 249.94 points, or 2.12% to 12.113.19. The Dow Jones Industrial Average (.DJI) rose 384.54 points, or 1.21%, to 32,157.88.

U.S. equity funds posted $11.5 billion outflows in the week to Wednesday, their largest outflow in 11 weeks, BofA said Friday.

Kroger Co (KR.N) jumped after the grocer raised its annual forecast.

Shares of Tapestry Inc (TPR.N) also rose after the luxury handbag maker said it expects revenue of $8 billion by fiscal year 2025.

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Reporting by Carolina Mandl, additional reporting by Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Anil D’Silva, Maju Samuel and Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

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