S&P 500, Nasdaq close up 4th straight week as optimism grows

NEW YORK, Aug. 12 (Reuters) – Wall Street closed higher on Friday as signs that inflation had peaked in July, boosted investor confidence that a bull market might emerge, and prompted the S&P 500 and Nasdaq to shut down. fourth consecutive week of gains.

The S&P 500 (.SPX) is up 17.7% from its mid-June low, with the latest gains coming from this week’s data showing a slower-than-expected rise in the consumer price index and a surprising drop in the producer prices last month.

The S&P 500 passed a closely monitored technical level of 4,231 points, indicating that the benchmark index has made up half of its losses since falling from its record peak in January. A 50% retracement for some indicates a bull market. read more

“It’s really just a number, but it certainly makes investors feel better — at least those who bought at the lower end,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

“I wouldn’t declare a win in this bear market just yet. There is probably still some bad news. But chances are we’ve seen the bottom.”

The Dow Jones Industrial Average (.DJI) rose 424.38 points, or 1.27%, to 33,761.05, while the S&P 500 (.SPX) gained 72.88 points, or 1.73%, to 4,280.15 and the Nasdaq Composite (.IXIC) added 267.27 points. or 2.09%, to 13,047.19.

For the week, the S&P 500 was trading at 3.25%, the Dow at 2.92% and the Nasdaq at 3.8%.

Volume on US exchanges was 9.99 billion shares, compared to the full session average of 11.04 billion over the past 20 trading days.

As the S&P 500 and Nasdaq posted their longest weekly gains since November, analysts noted that the Federal Reserve is still working to tame inflation by aggressively raising interest rates without triggering a recession.

“Markets certainly got some good news this week about inflation,” said Dec Mullarkey, director of investment strategy and asset allocation at SLC Management in Boston.

“A victory lap in some ways was in order, but it’s by no means ‘mission accomplished’. It’s still a very slow rut ahead of us.”

Inflation could slow to 7% or slightly lower by the end of the year, but getting core inflation below 4%, which is double the Fed’s target, will be harder than markets expect, Mullarkey said. .

Traders are counting on a less aggressive Fed, with Fed-Fund futures showing a 55.5% chance that Fed policymakers will raise rates by 50 basis points when they meet in September, instead of 75 basis points. FEDWATCH

It was a sea of ​​green on Wall Street for the second day in a row, with all 11 major S&P 500 sectors emerging, along with semiconductors (.SOX), small caps (.RUT) and Dow transports (.DJT). Growth stocks (.IGX) were up 2.1%, while value (.IVX) was up 1.4%.

Investors bought $7.1 billion worth of shares in the week to Wednesday, according to a Bank of America note, with US growth stocks recording their largest weekly inflow since December last year. read more

Also fueling optimism was data showing that US consumer confidence rose further in August from a record low this summer and that the short-term inflation outlook for US households eased again on falling gasoline prices. read more

After a difficult start to the year, better-than-expected Corporate America second quarter results supported positive sentiment for US equities.

Analysts overall think the S&P 500 posted year-over-year earnings growth of 9.7% in the period from April to June, much stronger than the 5.6% forecast at the end of the quarter, according to Refinitiv.

Banks (.SPXBK) were up 1.4% to extend their rally for the sixth week in a row.

GlobalFoundries Inc (GFS.O) rose 11.9% when it was added to BofA Global Research’s “US 1 list”.

Emerging issues outperformed the falling on the NYSE by a 4.43-to-1 ratio; on Nasdaq, a 2.76-to-1 ratio favored the advanced.

The S&P 500 posted five new 52-week highs and 29 new lows; the Nasdaq Composite recorded 78 new highs and 39 new lows.

Reporting by Herbert Lash in New York Additional reporting by Bansari Mayur Kamdar and Aniruddha Ghosh in Bengaluru; Editing by Arun Koyyur and Matthew Lewis

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