S&P 500 gains Friday as it heads for its best week since June

The S&P 500 rose on Friday and headed for its best week since June as a report showing slowing inflation on Thursday raised hopes that the Federal Reserve would soon ease its tightening campaign.

The S&P 500 added 0.6%, taking its gain for the week to more than 5%, its best week since that ended June 24 of this year. The Nasdaq Composite gained 1.7% as investors continued to buy tech stocks on hopes that interest rates would ease. The Dow Jones Industrial Average was the outlier, losing 0.2% as shares of defensive stocks UnitedHealth and Merck fell.

The Dow Jones jumped more than 1,200 points on Thursday following a lower than expected increase consumer prices for the month of October, giving investors hope for a slowdown in inflation. The S&P rose 5.5% and the Nasdaq Composite jumped about 7.4%. It was the best day since 2020 for all three.

Treasury yields plunged on Thursday due to a weaker-than-expected inflation rate and continued to fall on Friday. The 10-year Treasury yield was 3.82% on Friday after ending last week at 4.16%.

“From a stock market perspective, as long as the threat of much higher rates is gone, this should remove a major headwind,” Barclays’ Emmanuel Cau wrote in a Friday note.

On Friday, tech stocks rocked a drop in cryptocurrencies, which came under pressure on Friday after FTX announced its bankruptcy filing and CEO Sam Bankman-Fried stepped down. Bitcoin fell 6% and Ether more than 7%. Tech stocks and related crypto stocks rebounded after opening lower on Friday.

All indices are at the rate of a winning week. The Dow is up 4% on a weekly basis, while the Nasdaq Composite is up more than 7%. This week marks the resumption of a comeback rally for the bear market that began in mid-October but has stalled in recent weeks. The S&P 500 is now up nearly 14% from its bear market low, but still down 16% for the year.

“Yesterday’s strength was notable, it was remarkable, it was historically significant, but it’s a day. It’s a single day. And we can’t read that too much when we’re still in a period volatile in a downtrend and challenging macro environment,” said Bill Merz of US Bank Wealth Management.

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