Wall Street’s main indexes experienced gains on Friday due to a decrease in longer-dated Treasury yields, which boosted megacap growth stocks. Investors are eagerly awaiting key economic data next week to gain more insight into the future of monetary policy.
After a significant decline on Thursday, the S&P 500 and the Nasdaq rebounded from Federal Reserve Chair Jerome Powell’s hawkish comments. Powell’s remarks, which suggested the possibility of further tightening if necessary, caused traders to reassess their expectations of rate cuts from the Fed.
Despite this reassessment, traders are still pricing in a 62% chance of at least a 25 basis point rate cut in June, according to the CME Group’s FedWatch tool.
The decline in the yield on the benchmark 10-year Treasury note, coupled with a weaker-than-expected 30-year bond auction, supported equities. Megacap growth stocks, including Nvidia, Amazon.com, and Microsoft, led the charge with gains ranging from 1% to 1.9%.
Most of the major S&P 500 sectors traded higher, with the information technology sector leading the way with a 1.6% increase. However, healthcare stocks lagged behind, falling 0.5%.
According to Steve Wyett, chief investment strategist at BOK Financial, the market is entering a better phase, and there is a sense that the markets want to rally as the year comes to a close. Investors are now turning their attention to upcoming reports on consumer and producer prices, as well as retail sales, which will shape interest rate expectations.
Recent data showed that U.S. consumer sentiment has fallen for the fourth consecutive month in November, while expectations for inflation among households have risen.
Wyett added that although inflation is still above the Fed’s 2% target, it is unlikely to fall enough for the Fed to consider lowering rates anytime soon.
As of 11:42 a.m. ET, the Dow Jones Industrial Average was up 0.40%, the S&P 500 was up 0.64%, and the Nasdaq Composite was up 1.00%.
In company news, Plug Power shares plunged 41.2% after the hydrogen fuel cell maker raised concerns about its ability to continue operating. Illumina shares also dropped 13.7% as the gene-testing company lowered its full-year profit forecast for the second consecutive quarter.
Advancing issues outnumbered decliners on the NYSE, while decliners outnumbered advancers on the Nasdaq.
The S&P index recorded new 52-week highs and lows, while the Nasdaq recorded new highs and lows.
Overall, the stock market is eagerly awaiting upcoming economic data to gain further insights into the future of monetary policy.
Reporting by Amruta Khandekar and Shristi Achar A; Editing by Maju Samuel
