Major averages rose Friday afternoon to end the day on a bullish note as investors assessed harsher language from Federal Reserve speakers and pored over the latest earnings reports.
The Dow Jones Industrial Average rose 199.37 points, or 0.59%, to 33,745.69, while the S&P 500 climbed 0.48% to 3,965.34. The Nasdaq Composite ended just 0.01% above the fixed line at 11,146.06.
All major averages posted losses for the week. The Dow ended down 0.01%. The S&P 500 lost 0.69% on the week, while the Nasdaq ended down 1.57%. However, the three indices are positive for the month.
The market was split for much of the day, with the S&P 500 trading mostly flat as investors began to revise their expectations after some rebounds over the past week, starting with the impression of the October CPI. Stephanie Lang, chief investment officer at Homrich Berg, said this week is characterized by a “reality check point of view.”
“After the big rally following the better-than-expected CPI print, the market is digesting the current data, bringing things back to reality,” she said. “The rally following the CPI print we believe was not justified by fundamentals… The market is also pricing in a soft landing here, which we believe is unlikely to happen. when you hear Fed officials come out and reiterate their stance, you start to see the market readjusting to that.”
On Friday, Boston Federal Reserve Chair Susan Collins said she believes policymakers can get inflation under control without hurting jobs too much.
James Bullard, Chairman of the St. Louis Federal Reserve said Thursday this “the policy rate is not yet in an area that can be considered sufficiently restrictive.” He suggested that the appropriate zone for the federal funds rate could be between 5% and 7%, which is above what the market is pricing.
“We continue to believe that investors should place a lot more emphasis on real data and not focus too much on Fed rhetoric (the former will show where inflation is heading while the latter is fixated on where it is headed). found),” said Adam Crisafulli, founder of Vital Knowledge. “That said, investors are tired of battling the Fed’s daily tape bombs and the fear is that it will take another 2-3 CPIs for officials to stop berating the market every time it tries to recover.”