NEW YORK: Financials led the S&P 500 and the Dow higher on Friday as traders raised their bets on bigger interest rate hikes, while losses in Tesla and Nvidia weighed on the Nasdaq as a rally in technology stocks lost steam.
Wells Fargo and Bank of America added more than 1.5% each. The banks index gained 1.5% as US 10-year Treasury yield hit 2.4%.Nine of the 11 major S&P sectors advanced in early trading, with financials and utilities rising the most. US stocks have rallied in six of the last eight sessions as gains in megacap stocks and strong economic data overshadowed worries about escalating geopolitical tensions, higher oil prices and calls for aggressive action by the Fed to combat surging inflation.”
The US economy is so strong at this point, the labor market is so tight that the equity market is telling you that the US economy can handle this particular move in oil for now,” said Tom Mantione, managing director, UBS Private Wealth Management in Stamford, Connecticut.”
The speed at which the Fed moves will definitely have an impact on the US equity markets. While we’ve seized on 3% a day move, so long as the market isn’t sure, whether it’s 25 or 50 basis point (increase) you are going to see volatility.”
Economists at Citibank are expecting four 50 basis points interest rate hikes from the US Federal Reserve this year, joining Bank of America and other Wall Street banks in forecasting an aggressive tightening path against the backdrop of soaring inflation.
The US central bank last week raised interest rates for the first time since 2018.Meanwhile, a Russian negotiator said the country and Ukraine are making limited progress on the key issues. US President Joe Biden landed in Rzeszow, Poland, on Friday to get a first-hand look at the refugee crisis after Russia’s invasion of Ukraine.
At 10:22 a.m. ET, the Dow Jones Industrial Average was up 215.44 points, or 0.62%, at 34,923.38, the S&P 500 was up 16.05 points, or 0.36%, at 4,536.21, and the Nasdaq Composite was down 33.20 points, or 0.23%, at 14,158.64.The benchmark S&P 500 and the tech-heavy Nasdaq indexes are on track for their second straight weekly gains. Microsoft Corp, Tesla Inc and Nvidia Corp fell between 0.1% and 0.6% after rallying sharply in the previous session. Shares of Meta Platforms and Berkshire Hathway rose 1.3% each, respectively, to provide the biggest boost to the S&P 500 index. The CBOE volatility index, also known as Wall Street’s fear gauge, fell to its lowest level since Feb. 10.Advancing issues outnumbered decliners by a 1.11-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.52-to-1 ratio on the Nasdaq.
The S&P index recorded 41 new 52-week highs and four new lows, while the Nasdaq recorded 54 new highs and 52 new lows.