Stocks end higher after inflation nears 40-year high

US stocks ended the week higher after new inflation data gave investors hope that price hikes could near a peak.

The S&P 500 closed at a record high on Friday, rising about 1%, or 44.57 points, to 4,712.02. The move marked the largest week-long percentage gain in the index since the week ending February 5. The tech-focused Nasdaq Composite Index rose 0.7%, or 113.23 points, to 15,630.60. The Dow Jones Industrial Average rose 0.6%, or 216.30 points, to 35,970.99.

Inflation hit a nearly four-decade high in November. Figures from the Ministry of Labor showed the Consumer Price Index, which measures what people pay for goods and services, rose 6.8% in November from a year ago. The pricing pressures were brought on by strong demand and supply chain issues linked to the pandemic, as well as higher energy prices.

“There is some relief in the market right now. This is in line with market expectations and on top of that is expected to be the peak in year over year inflation numbers, ”said Edward Park, chief investment officer of the Brooks Macdonald investment firm.

The Federal Reserve will hold a meeting next week where it could provide more details on how it plans to end its bond buying program and when it plans to start raising interest rates. . Investors are waiting to see if officials signal an earlier end to stimulus measures and how they characterize inflation.

In bond markets on Friday, the yield on the 10-year Treasury bill, which rises when prices fall, stood at 1.487%, from 1.486% on Thursday. Futures on Brent crude, the benchmark in global oil markets, rose 73 cents per barrel, or 1%, to $ 75.15 per barrel. They were recently up more than 8% for the month.

Friday’s moves suggest that “the market is now comfortable with the idea that the Fed is going to have a more accelerated path towards phasing out and other forms of policy normalization,” said David Jilek, policy strategist. Chief Investment Officer at Gateway Investment Advisers LLC.

The Omicron variant has so far mainly caused mild cases of Covid-19 in a small group of widely vaccinated people in the United States, according to federal data. Over the past few weeks, stocks have oscillated between conflicting headlines on the Omicron variant and mixed signals on the health of the economy. Some pharmaceutical companies, including Pfizer and GlaxoSmithKline, said this week that their injection and antibody therapy, respectively, appear to work against Omicron in early studies.

David Kelly, chief global strategist at JP Morgan Asset Management, said 2022 could see less uncertainty about the economy and the pandemic as the economy has adapted to pandemic developments.

“Covid will have a decreasing impact on the markets because Covid will have a decreasing impact on the economy,” Mr Kelly said.

In individual stocks, Oracle stocks gained 16%, or $ 13.86, to $ 102.63 after the database giant released second-quarter results above estimates. Broadcom shares rose 8.3%, or $ 48.26, to $ 631.68 after the company posted better-than-expected results and strong guidance for the January quarter, increased its dividend and announced a share buyback program.

Chewy shares lost 8.1%, or $ 4.54, to $ 51.76 after the online pet retailer posted disappointing results, reflecting supply chain and labor costs -work higher than expected.

Tesla and SpaceX chief executive Elon Musk said Thursday evening that he could quit his job, without providing details of which positions he could quit or how serious he was about it. He said on Twitter that he was “thinking about quitting my job and becoming a full-time influencer,” using an abbreviation for “What do you think?” Tesla shares rose 1.3%, or $ 13.23, to $ 1,017.03 on Friday.

Stocks have fluctuated in recent weeks.


Photo:

BRENDAN MCDERMID / REUTERS

Overseas, the pancontinental Stoxx Europe 600 index fell by 0.3%. The main Asian indices closed lower. Hong Kong’s Hang Seng fell 1.1% and Japan’s Nikkei 225 fell 1%. South Korea’s Kospi lost 0.6% and China’s Shanghai Composite edged down 0.2%.

Developing China’s Fortune Land‘s

shares rose 10% in Shanghai exchanges after the indebted real estate developer said creditors approved a debt restructuring plan, which could turn it into a lifeline. Concerns over the Chinese real estate sector weighed on the markets this year. This week, Fitch Ratings said that China Evergrande Group and a second major real estate developer, Kaisa Group,

had defaulted after missing US dollar bond payments.

While the cost of groceries, clothing, and electronics rose in the United States, prices in Japan remained low.

Write to Caitlin Ostroff at [email protected] and Dave Sebastian at [email protected]

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