To end the week all the indexes saw another huge rally, for the S&P at over 3% the biggest one day rise in two years.  Why? Part of it is just sellers exhaustion or what might be a relief rally. But a bigger part is the latest from the futures traders pricing in on Friday a March rate of 3.5% vs the previous 4 percent. That combined with business slowing, inflation modestly moderating and a sharp decline in commodity prices produced an expectation of fewer future rate hikes. The Fed’s moves to fight inflation thus far seem to be working and has boosted confidence in a positive outcome.  

 Another major contributing factor was the Fed’s stress test on the banks that showed sufficient capital to weather even a major recession.  All in all, everyone was quite happy today but then too everyone is also desperately looking for some signs, any signs, of hope on the horizon and so are grasping. This could go away in another day.  But at least for today the news is good.  Volume at 19 billion, hugely above average, again needs to be ignored due to today’s reconstitution of indexes. 

Fri  June 24, 2022  4:35 PM

Wall Street mints big gains to end strong week

By Lewis Krauskopf, Sruthi Shankar and Anisha Sircar

DJ: 30,677.36  +194.23       NAS: 11,232.19  +179.11        S&P: 3,795.73  +35.84     6/23

DJ:  31,500.68  +823.32      NAS: 11,607.62  +375.43        S&P: 3,911.74  +116.01   6/24

June 24 (Reuters) - Wall Street's main indexes soared on Friday in a broad rally as signs of slowing economic growth and a recent pullback in commodity prices tempered expectations for the Federal Reserve's rate-hike plans.  The S&P 500 rose over 3% for its biggest one-day percentage rise since May 2020. All 11 of the benchmark index's sectors ended at least 1.5% higher.  Stocks rebounded this week as financial markets have been roiled over worries that rapid rate hikes by the Fed to rein in 40-year-high inflation could cause a recession.

Still, investors have been gauging when the market might hit its bottom after the benchmark S&P 500 (.SPX) earlier this month recorded a 20% drop from its January closing peak, confirming the common definition of a bear market.  "Some of the moves, the sellers just get exhausted so you don’t have as much capital moving out," said Shawn Cruz, head trading strategist at TD Ameritrade.  "This might be a little bit of a relief rally," Cruz said. "But I think I would not encourage anyone to start going in with both hands at the moment, because we have seen this repeatedly where these things can reverse themselves pretty quickly." 

 

The Dow Jones Industrial Average (.DJI) rose 823.32 points, or 2.68%, to 31,500.68, the S&P 500 (.SPX) gained 116.01 points, or 3.06%, to 3,911.74 and the Nasdaq Composite (.IXIC) added 375.43 points, or 3.34%, to 11,607.62.  For the week, the S&P 500 rose 6.4%, the Dow added 5.4%, the Nasdaq gained 7.5%. 

 

Volume surged towards the end of the session as the close of trading marked the completion of FTSE Russell's reconstitution of its indexes that are tracked by trillions of dollars in investor funds. read more

U.S. consumer sentiment fell to a record low in June, but Americans saw a marginal improvement in the outlook for inflation, a survey showed on Friday. Data on Thursday pointed to slowing U.S. business activity in June. read more  Helping ease inflation fears was a sharp drop in commodity prices this week. The Refinitiv/CoreCommodity Index (.TRCCRB), which measures prices for energy, agriculture, metals and other commodities, fell to a roughly two-month low on Thursday after hitting a multi-year peak earlier in June.

Fed funds futures traders are now pricing for the benchmark rate to rise to about 3.5% by March, down from expectations last week that it would increase to around 4%.  "The expectation of future rate hikes coming down is part of the equation that makes today’s equity market so strong," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.  Bank stocks rallied, with the S&P 500 banks index (.SPXBK) rising 3.7%, after the Fed's annual "stress test" exercise showed that the lenders have enough capital to weather a severe economic downturn. read more

In company news, FedEx Corp (FDX.N) shares jumped 7.2% after the parcel delivery company issued a stronger-than-expected full-year profit forecast. read more

Advancing issues outnumbered declining ones on the NYSE by a 4.66-to-1 ratio; on Nasdaq, a 2.15-to-1 ratio favored advancers.  The S&P 500 posted 1 new 52-week high and 29 new lows; the Nasdaq Composite recorded 34 new highs and 86 new lows.

More than 19 billion shares changed hands in U.S. exchanges, compared with the 12.9 billion daily average over the last 20 sessions.