US stock indices rose by Friday’s close, demonstrating growth for the fourth day in a row. Major stocks also posted strong weekly gains as traders welcomed the Federal Reserve’s measured first move to raise interest rates.
The S&P 500 ended up more than 1.1%. The index also posted its first weekly gain in three weeks and the biggest since November 2020, up more than 6% since last Friday. U.S. crude oil prices rose above $104 a barrel, while 10-year Treasury yields declined but remained above 2.1%.
Meanwhile, shares of GameStop (GME) — the original darling of last year’s Reddit-fueled investment frenzy — turned positive even after the retailer posted a bigger-than-expected loss in the fourth quarter. FedEx (FDX) shares fell after the shipping giant released quarterly earnings on Thursday afternoon. This reflected lower-than-expected earnings as rising labor and shipping costs more than offset FedEx’s higher prices for customers.
Overall, for U.S. equities investors, the news this week that the Fed has decided to raise rates by 25 basis points and is on track for six additional rate hikes later this year has helped bring clarity to the future monetary policy trajectory and removed a veil of uncertainty. . The scale of the interest rate hike was hailed as a carefully considered first step, kicking off the process of fighting inflation and avoiding a major shock to markets already weighing Russia’s war in Ukraine.
“They took what I consider the safe route, which is 25 basis points,” Sonal Desai, chief investment officer of Franklin Templeton Fixed Income, told Yahoo Finance Live Thursday. “If it wasn’t for what we’re seeing in the geopolitical scene right now, they would probably go to 50. So I definitely don’t rule out a faster and faster pace of rate hikes in the future.”
Later, Fed officials may also revise their forecasts to raise interest rates this year if inflation does not slow down quickly, Desai added. Based on Wednesday’s Fed forecasts, short-term interest rates are likely to be around 1.75% by the end of the year.
The story goes on
“I see them rising to 2% this year – we can expect them to rise closer to 3% by the end of next year,” she added. “So I look at what the Fed has done. I think it was necessary because it might seem hawkish, but at the moment the Fed is way behind.”
Technology stocks, in particular, received a boost following the Fed’s decision, with some of the more battered growth stocks reversing some losses since the start of the year. While some strategists suggested that a bottom may have been reached for most tech stocks, others were less certain.
“We have received hawkish statements from the Fed. [Wednesday], and while they will be a major drag on tech stocks and other aggressive growth stocks, the data is now known. And when it becomes known, the market absorbs them,” Paul Mix, portfolio manager at Independent Wealth Solutions Management, told Yahoo Finance. is happening in Eastern Europe because if we still have geopolitical risks, we still have risks for these stocks.”
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4:05 pm ET: Stocks close sharply higher, S&P 500 up more than 6% in a week
Here’s where stocks ended Friday’s session:
S&P 500 (^ GSPC): +51.42 (+1.17%) to 4,463.09
Dow (^ DJI): +273.45 (+0.79%) to 34,754.21
Nasdaq (^IXIC): +279.06 (+2.05%) to 13,893.84
Raw (CL=F): +1.70 dollars (+1.65%) to 104.68 dollars per barrel
Gold (GK=F): from -24.20 USD (-1.25%) to 1919.00 USD per ounce
10 year treasury (^TNX): -4.6 b.p. up to a yield of 2.146%
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1:44 pm ET: Minneapolis Fed’s Kashkari: Fed may need to act ‘more aggressively’ to bring inflation down to 2% target
Minneapolis Federal Reserve President Neil Kashkari warned on Friday that the Federal Reserve may need to act more aggressively and possibly even move beyond neutral policy to bring inflationary pressures back to central bank targets.
If inflation eventually eases, “the FOMC will need to unaccommodate and rise slightly above neutral until inflationary dynamics subside,” Kashkari said in a new essay on Friday.
However, if the economy ends up “in equilibrium with high pressures and high inflation”, then the Fed “will need to act more aggressively and bring policy down to bring the economy back to a sustainable equilibrium.” with our 2% inflation target,” he added. “Over the course of this year, as we move towards what I expect to be a neutral political stance, we will be receiving information that will help us determine how far we can will have to go.”
Kashkari also said his dot on the FOMC scatter chart, or roundup of economic forecasts, shows interest rates ending in the 1.75% to 2.00% range this year. Its nominal neutral rate estimate also remained at 2%, where it has been for several years.
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10:03 am ET: February home sales fell more than expected
Used home sales in the US fell in February by the most since May 2020 as rising mortgage rates and still-rising prices weighed on affordability and overall housing market activity.
Existing home sales fell 7.2% in February from January, the National Association of Realtors (NAR) said Friday. That was more than the 6.2% drop expected, according to Bloomberg consensus data. This also came after existing home sales rose 6.6% in January.
With February’s decline, U.S. existing home sales were seasonally adjusted at 6.02 million year-on-year. The median price for an existing home is up 15% from February last year to $357,300.
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9:30 am ET: Stocks open lower
Here is where the markets traded right after the first bell:
S&P 500 (^ GSPC): from -13.51 (-0.31%) to 4,398.15
Dow (^ DJI): -99.46 (-0.29%) to 34,381.30
Nasdaq (^IXIC): -70.34 (-0.52%) to 13,549.34
Raw (CL=F): +$0.19 (+0.18%) to $103.17 per barrel
Gold (GK=F): from -12.90 USD (-0.66%) to 1930.30 USD per ounce
10 year treasury (^TNX): -3 bp up to a yield of 2.16%
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7:29 am ET: St. Louis Fed President Bullard urges Fed to raise rates more than 3% this year
St. Louis Fed President Jim Bullard said Friday he wants the Federal Reserve to raise interest rates more quickly and begin the process of cutting its balance sheet by nearly $9 trillion to bring down inflation.
Bullard was the only member of the Federal Open Market Committee who disagreed with the Fed’s decision this week to raise interest rates by 25 basis points. Instead, Bullard wanted the Fed to raise 50 basis points and also implement a plan to cut the balance sheet.
“The combination of strong real economic performance and unexpectedly high inflation means that the Committee’s discount rate is currently too low to prudently manage the US macroeconomic environment,” Bullard said in a statement. “Moreover, US monetary policy has inadvertently continued to ease as inflation soared and the discount rate remained very low, pushing short-term real interest rates down. The Committee will have to act quickly to rectify this situation, otherwise it risks losing confidence in the inflation target.”
Bullard said that at his point on the “dot chart” or “Fed’s Roundup of Economic Forecasts,” he saw that the Fed had raised rates above 3% this year.
“This will allow the discount rate to be quickly adjusted to a level more appropriate to the current circumstances,” Bullard said. “The Committee has successfully acted in this way before. In 1994 and 1995, the Committee made similar discrete adjustments to the discount rate to better align it with the macroeconomic circumstances of the time. The results were excellent.”
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7:11 am ET: Stock futures fall, reclaiming some gains
Here’s where the markets traded ahead of the Friday morning open:
S&P 500 Futures (ES=F): -30.75 points (-0.7%) to 4,379.50
Dow futures (UM=F): -200 points (-0.58%) to 34,261.00
Nasdaq futures (NQ=F): -104.75 points (-0.74%) to 14,007.00
Raw (CL=F): +1.34 dollars (+1.3%) to 104.32 dollars per barrel
Gold (GK=F): from -7.50 USD (-0.39%) to 1935.70 USD per ounce
10 year treasury (^TNX): +13.6 b.p. up to a yield of 2.1400%
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6:13 pm ET Thursday: Stock futures
Here’s where the stock traded Thursday night:
S&P 500 Futures (ES=F): -16.25 points (-0.37%) to 4,394.00
Dow futures (UM=F): -140 points (-0.41%) to 34,321.00
Nasdaq futures (NQ=F): -48.25 points (-0.34%) to 14,063.50
NEW YORK, NEW YORK – MARCH 16: Traders work on the floor of the New York Stock Exchange (NYSE) on March 16, 2022 in New York City. The Dow Jones started the day in positive territory, continuing yesterday’s rally. (Photo by Spencer Platt/Getty Images)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
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