Nasdaq, S&P 500 end sharply higher, fueled by inflation optimism

Dow down over 300 points in the morning before beginning an ascent for the rest of the day to close just above break-even. This was due primarily to a decline in the healthcare sector, something that typically happens on growth rally days. That is the trend, when growth rises, value falls and vice-versa.  But the growth indexes spent the day still riding high from yesterday’s very positive CPI report and once again the market displayed exuberant confidence in the Fed trimming back rate hikes as early as next month, so much so that in two short days the oddsmakers put a ½ point December hike at 81% vs Wednesday’s 52.  This was the biggest weekly gain for the S&P since June and for the Nasdaq since March.  Volume was heavy at 13.5 billion. 

Fri  November 11, 2022  4:12 PM

Nasdaq, S&P 500 end sharply higher, fueled by inflation optimism

By Noel Randewich and Sruthi Shankar

DJ: 33,715.37  +1201.43       NAS: 11,114.15  +760.97        S&P: 3,956.37  +207.80   11/10

DJ: 33,747.86  +32.49           NAS: 11,323.33  +209.18        S&P: 3,992.93  +36.56     11/11

Nov 11 (Reuters) - The S&P 500 and Nasdaq ended sharply higher on Friday, extending a rally started the day before after a soft inflation reading raised hopes the Federal Reserve would get less aggressive with U.S. interest rate hikes.  Amazon (AMZN.O) jumped 4.3%, with Apple (AAPL.O) and Microsoft (MSFT.O) both up more than 1% and contributing to the Nasdaq's gain.  On Thursday, the S&P 500 and the Nasdaq racked up their biggest daily percentage gains in more than 2-1/2 years as annual inflation slipped below 8% for the first time in eight months.  Declines in healthcare stocks limited the Dow Jones Industrial Average's gain, with UnitedHealth Group (UNH.N) down 4.1% for the day.

"What we're really seeing today is simply a follow-through on yesterday. There's a lot of cash sitting on the sidelines that is being put to work," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.  "Perhaps it signals some type of bottom being put in the market, some type of line drawn in the sand. But even if we put in a bottom, we're a long way away from setting new highs,” Ghriskey said.

Investors see an 81% chance of a 50-basis point rate hike in December and a 19% chance of a 75-basis point hike, according to CME Fedwatch tool.  Adding some nervousness on Wall Street, crypto exchange FTX said it would start U.S. bankruptcy proceedings and that CEO Sam Bankman-Fried resigned due to a liquidity crisis that prompted intervention from regulators around the world.

The S&P 500 climbed 0.93% to end the session at 3,993.05 points.  The Nasdaq gained 1.88% to 11,323.33 points, while Dow Jones Industrial Average rose 0.10% to 33,749.18 points.

Volume on U.S. exchanges was relatively heavy, with 13.5 billion shares traded, compared to an average of 12.0 billion shares over the previous 20 sessions.

Of the 11 S&P 500 sector indexes, six rose, led by energy (.SPNY), up 3.07%, followed by a 2.48% gain in communication services (.SPLRCL).  The S&P 500 growth index (.IGX), which includes interest rate-sensitive technology stocks, rose 1.6%, beating the value index's (.IVX) gain of 0.3%.  For the week, the S&P 500 rose 5.9%, the Dow added 4.15% and the Nasdaq jumped 8.1%. It was the S&P 500's biggest weekly gain since June and the Nasdaq's largest weekly gain since March.

Worries about an economic downturn have hammered Wall Street this year. The S&P 500 remains down about 16% year to date, on course for its biggest annual decline since 2008.

U.S.-listed shares of Chinese companies rose, with Alibaba Group Holding Ltd gaining 1.4% after China eased some of its strict COVID-19 rules.  Advancing issues outnumbered falling ones within the S&P 500 (.AD.SPX) by a 1.7-to-one ratio.  The S&P 500 posted 22 new highs and no new lows; the Nasdaq recorded 102 new highs and 110 new lows.