Wall Street’s main indexes ended with big gains on Friday, boosted by heavyweight tech and growth stocks as Treasury yields calmed, while investors looked ahead to next week’s reports on U.S. inflation and other economic data. The tech-heavy Nasdaq Composite posted its biggest one-day percentage rise since May 26.
The Canadian benchmark stock index also closed higher, erasing earlier losses, but gains were much less impressive given its lighter weighting in tech and growth names.
U.S. equities bounced back from declines the previous session which followed hawkish comments from Federal Reserve Chair Jerome Powell about interest rates. Thursday’s drop ended the longest winning streaks in two years for the S&P 500 and the Nasdaq.
Investors have been focused on benchmark Treasury yields, which have eased somewhat from 16-year highs, and monetary policy as they assess whether the Fed might be done raising rates to control inflation and when the central bank could start cutting rates.
“We have had rates roll over here a little bit and I think that’s one of the reasons we have seen this rally over the last couple of weeks,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “If you think this rally has legs, yesterday gave you an opportunity to go buy some stocks today.”
Next week the U.S. consumer price index report will be closely watched, along with data on producer prices and retail sales, which will further shape interest rate projections.
“In general, the expectation investors have is that the upcoming inflation data is going to be positive for the market and I think they want to get in front of it a little bit,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
The Dow Jones Industrial Average rose 391.16 points, or 1.15%, to 34,283.1, the S&P 500 gained 67.89 points, or 1.56%, to 4,415.24 and the Nasdaq Composite gained 276.66 points, or 2.05%, to 13,798.11.
The S&P 500 posted its highest closing level since Sept 19.
The Toronto Stock Exchange’s S&P/TSX composite index closed up 67.06 points, or 0.34%, at 19,654.47.
Still, the Canadian index closed lower for the week after posting the biggest weekly jump since April 2020 in the previous week. By contrast, the Dow this week rose 0.7%, the S&P 500 gained 1.3% and the Nasdaq climbed 2.4%.
The TSX energy sector on Friday ended up 1.7% after the price of oil gained about 2% as Iraq voiced support for OPEC+’s oil cuts ahead of a meeting in two weeks.
“Oil was having a nice bounce today. It has clearly been under pressure for the last week ... that has got all the big cap energy stocks up,” said Mike Archibald, a portfolio manager at AGF Investments.
Technology stocks were also among the big gainers in Toronto, up 1.9%, as Constellation Software shares rose 3.7% to hit a record high following upbeat results and Shopify added 1.6%.
“Technology names in the U.S. and in Canada are breaking out again here and certainly look like potential for market leadership going forward,” Archibald said.
The materials sector slipped 0.7%, as prices of most nonferrous metals fell after hawkish comments by the U.S. Federal Reserve Chair Jerome Powell signaled chances of another rate hike.
A 3.3% decline in First Quantum shares also weighed on the materials index. Chinese copper miner Jiangxi Copper has increased its stake in the Canadian miner to 18.5% from 18.3%.
Altus Group tumbled 21.8% to the bottom of the TSX, after the real estate fund intelligence provider reported lower-than-expected third-quarter results. That dragged the broader real estate index down 0.6%.
Quebecor led gains on the capped communication services index with a 2.5% rise, after the telecom firm posted a rise in third-quarter profit.
Meanwhile, all 11 S&P 500 sectors ended in positive territory, led by a 2.6% gain for the technology sector. Megacap stocks that have propelled the market higher this year also rose solidly on Friday. Nvidia rose about 3%, with Meta Platforms up 2.6% and Microsoft up 2.5%.
“People are looking at megacap tech and saying in an environment of higher rates and a slowing economy, these companies remain the best place to be and are willing to pay a premium for them,” said Meckler of Cherry Lane Investments
Helping support equities, the yield on the benchmark 10-year Treasury note was little changed at 4.62% the day after a jump that was partly driven by a weaker-than-expected 30-year bond auction.
Data on Friday showed U.S. consumer sentiment fell for a fourth straight month in November, and households’ expectations for inflation rose again.
In company news, Illumina shares dropped 8% as the genetic testing company trimmed its full-year profit forecast for the second straight quarter.
Advancing issues outnumbered decliners by a 2.7-to-1 ratio on the NYSE. There were 70 new highs and 152 new lows on the NYSE. On the Nasdaq 2,589 advancing issues outnumbered decliners by a 1.6-to-1 ratio on the Nasdaq. The Nasdaq recorded 61 new highs and 353 new lows. About 10.2 billion shares changed hands in U.S. exchanges, compared with the roughly 11 billion daily average over the last 20 sessions.
Reuters, Globe staff