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U.S. Stocks Move Sharply Higher, Snapping Three-Week Losing Streak

wallstreet oct30 24jun22 lt

Stocks moved sharply higher during trading on Friday, extending the strong upward move seen going into the close of trading on Thursday. The major averages all showed substantial upward moves over the course of the session.

The major averages saw further upside in late-day trading, ending the session at their best levels of the day. The Dow jumped 823.32 points or 2.7 percent to 31,500.68, the Nasdaq surged 375.43 points or 3.3 percent to 11,607.62 and the S&P 500 shot up 116.01 points or 3.1 percent to 3,911.74.

With the extended rally, the major averages snapped a three-week losing streak. For the holiday-shortened week, the Nasdaq soared by 7.5 percent, while the S&P 500 and the Dow spiked by 6.4 percent and 5.4 percent, respectively.

Overseas strength carried over onto Wall Street, as traders continued to pick up stocks at relatively reduced levels following recent weakness.

Traders continue to express concerns about inflation, interest rates and a potential recession but may feel to sell-off earlier this month was overdone.

"Hopes that inflation is peaking and that the economy is still on solid footing has some investors confidently buying up heavily discounted stock," said Edward Moya, senior market analyst at OANDA. "It seems Wall Street is starting to believe that even if the economy has a recession, it will be a short one."

He added, "This could still be a bear market rally, but that might change if we get some less pessimistic outlooks from some major retailers next week."

Adding to the positive sentiment, shares of FedEx (FDX) soared after the delivery giant narrowly missed fiscal fourth quarter earnings estimates but provided upbeat guidance for the current year.

FedEx has helped to lead a rally by transportation stocks, resulting in a 4 percent spike by the Dow Jones Transportation Average.

Oil service stocks also showed a substantial move back to the upside, with the Philadelphia Oil Service Index surging by 4.6 percent after ending the previous session at its lowest closing level in five months.

The rally by oil service stocks comes as the price of crude oil for August delivery shot up $3.35 to $107.62 a barrel after slumping $1.92 to $104.27 a barrel on Thursday.

Considerable strength was also visible among semiconductor stocks, as reflected by the 4.5 percent jump by the Philadelphia Semiconductor Index.

Banking, chemical, steel and retail stocks also showed strong moves to the upside amid broad based buying interest.

On the U.S. economic front, the Commerce Department released a report unexpectedly showing a significant rebound in new home sales in the month of May.

The report showed new home sales surged 10.7 percent to an annual rate of 696,000 in May after plunging 12.0 percent to an upwardly revised rate of 629,000 in April.

The spike surprised economists had expected new home sales to dip 0.5 percent to an annual rate of 588,000 from the 591,000 originally reported for the previous month.

Meanwhile, a separate report from the University of Michigan showed consumer sentiment in the U.S. tumbled by slightly more than initially estimated in the month of June.

The report showed the consumer sentiment index for June was downwardly revised to 50.0 from the preliminary reading of 50.2.

The consumer sentiment index is down sharply from the final May reading of 58.4, plunging to its lowest level on record.


Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index shot up by 1.2 percent, while China's Shanghai Composite Index advanced by 0.9 percent.

The major European markets also showed significant moves to the upside on the day. While the French CAC 40 Index spiked by 3.2 percent, the U.K.'s FTSE 100 Index surged by 2.7 percent and the German DAX Index jumped by 1.6 percent.

In the bond market, treasuries gave back ground after moving sharply higher over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.7 basis points to 3.125 percent.

Looking Ahead

Next week's trading may be impacted by reaction to reports on durable goods orders, pending home sales, consumer confidence, personal income and spending and manufacturing activity.

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