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U.S. Stocks Move Sharply Higher On Slowing Price Growth

wallstreet sept27 27may22 lt

Stocks moved sharply higher during trading on Friday, extending the strong upward move seen on Tuesday and Wednesday. The major averages continued to recover after hitting their lowest levels in over a year in recent sessions.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow jumped 575.77 points or 1.8 percent to 33,212.96, the Nasdaq spiked 390.48 points or 3.3 percent to 12,131.13 and the S&P 500 surged 100.40 points or 2.5 percent to 4,158.24.

For the week, the Dow soared by 6.2 percent, while the S&P 500 and the Nasdaq skyrocketed by 6.6 percent and 6.8 percent, respectively.

The continued strength on Wall Street came following the release of a Commerce Department report showing a slowdown in the pace of core consumer price growth in the month of April.

A reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth slowed to 4.9 percent in April from 5.2 percent in March.

The data contributed to optimism that the Fed will slow the pace of monetary policy tightening in the second half of the year.

The inflation reading was included in a report showing personal income in the U.S. increased by slightly less than expected in the month of April.

The report showed personal income rose by 0.4 percent in April after climbing by 0.5 percent in March. Economists had been expecting another 0.5 percent increase.

Meanwhile, the Commerce Department said personal spending advanced by 0.9 percent in April after surging by an upwardly revised 1.4 percent in March.

Personal spending was expected to increase by 0.7 percent compared to the 1.1 percent jump originally reported for the previous month.

Traders largely shrugged off a separate report from the University of Michigan showing consumer sentiment in the U.S. deteriorated by even more than previously estimated in the month of May.

The report showed the consumer sentiment index for May was downwardly revised to 58.4 from the preliminary reading of 59.1. Economists had expected the index to be unrevised.

The consumer sentiment index is even further below the April reading of 65.2, slumping to its lowest level since hitting 55.8 in August of 2011.

Sector News

Computer hardware stocks extended the rebound seen over the two previous sessions, driving the NYSE Arca Computer Hardware Index up by 4.2 percent.

Dell Technologies (DELL) helped lead the sector higher after reporting fiscal first quarter results that exceeded analyst estimates on both the top and bottom lines.

Substantial strength was also visible among semiconductor stocks, as reflected by the 4 percent surge by the Philadelphia Semiconductor Index.

Airline stocks also showed significant move to the upside on the day, with the NYSE Arca Airline Index soaring by 3.1 percent.

Biotechnology, networking a commercial real estate also saw considerable strength, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index climbed by 0.7 percent, while Hong Kong's Hang Seng Index spiked by 2.9 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.3 percent, the German DAX Index and the French CAC 40 Index both jumped by 1.6 percent.

In the bond market, treasuries gave back ground after an early advance but still closed modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.3 basis points to 2.743 percent.

Looking Ahead

Following the long holiday weekend, the monthly jobs report is likely to be in focus next week along with reports on manufacturing and service sector activity and the Fed's Beige Book.

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