Major averages edged higher in afternoon trade on Friday to end the day on an upbeat note, as investors appreciated more dovish language from Federal Reserve speakers and looked ahead to the latest earnings report.
The Dow Jones Industrial Average rose 199.37 points, or 0.59%, to 33,745.69, while the S&P 500 added 0.48% to 3,965.34. The Nasdaq Composite finished just 0.01% above a flat line at 11,146.06.
All major averages showed losses for the week. The Dow ended down 0.01%. The S&P 500 lost 0.69% for the week, while the Nasdaq ended down 1.57%. However, all three indices are positive for the month.
Markets were divided for most of the day, with the S&P 500 trading mostly flat as investors began to reset expectations after a pair of rallies last week, starting with the October CPI print. Stephanie Lang, chief investment officer at Homrich Berg, said this week was characterized by a “reverse look at reality”.
“After the big rally that ended with a better-than-expected CPI print, the market is digesting the current data that brings things back to reality,” she said. “The rally that followed the CPI print, we think, was justified by fundamentals… The market is also pricing in a soft landing here, which we don’t think is going to happen. So when you hear Fed officials come out and reiterate their stance, you start to see, that the market adapts to it.”
On Friday, Boston Federal Reserve President Susan Collins expressed confidence that policymakers can rein in inflation without doing too much damage to employment.
St. Louis Federal Reserve President James Bullard said Thursday that “the policy rate is not yet in an area that could be considered sufficiently restrictive.” He suggested that the appropriate zone for the federal funds rate could be in the range of 5% to 7%, which is above market prices.
“We continue to think that investors should put much more emphasis on the actual data than focus too much on the Fed’s rhetoric (the former will show where inflation is headed, while the latter is fixed at where it was),” said Adam Crisafulli, founder. Vital Knowledge. “This means that investors are tired of fighting the Fed’s daily tape bombs, and there are concerns that it may take another 2-3 CPI hikes for officials to stop warning the market every time it tries to tighten.”
Read the coverage of today’s market in Spanish here.