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US: Wall St ends volatile week on high note as tech leads

Saturday, May 21, 2016 - 07:36
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[BENGALURU] Wall Street rallied on Friday, led by tech stocks on the back of Applied Materials' strong profit forecast, ending a volatile week on a positive note.

The S&P 500 eked out gains for the week after three straight weeks of losses, while the Nasdaq snapped a four-week losing streak. Despite gains on Friday, the Dow ended its fourth consecutive week in the red.

The tech sector led the way on Friday, lifted by a higher-than-expected profit forecast from chip company Applied Materials, which jumped 13.8 per cent.

Apple rose 1.1 per cent and the shares snapped a four-week losing streak.

"The tech sector, which is pretty big, is having a pretty good day, led by the Applied Materials earnings," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The Federal Reserve surprised investors when the central bank's minutes, released on Wednesday, opened the door to a rate increase in June, roiling financial markets.

Traders now give a 30 per cent chance of a rate hike at the Fed's June meeting, according to the CME FedWatch tool, about twice as high as they expected on Tuesday.

"The market is starting to come to grips with the Fed potentially moving in June," said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina.

"I think it's potentially a positive dynamic if the market can actually go up in the face of the Fed probability going up."

The Dow Jones industrial average rose 65.54 points, or 0.38 per cent, to 17,500.94, the S&P 500 gained 12.28 points, or 0.6 per cent, to 2,052.32 and the Nasdaq Composite added 57.03 points, or 1.21 per cent, to 4,769.56.

Nine of 10 S&P sectors ended higher.

The S&P is marginally positive for 2016. The benchmark index has rebounded some 13 per cent off of February lows, but is little changed in recent weeks amid mixed corporate earnings and economic data.

Data on Friday showed US home resales rose more than expected in April, suggesting the economy continues to gather pace during the second quarter.

Economic data will garner most of the attention next week, with investors placing a heavy weight on a host of reports as they try and determine the likelihood of a June rate hike.

In other corporate results, Deere shares fell 5.5 per cent to US$77.74. The farm equipment maker cut its profit outlook further and reported lower quarterly earnings.

Campbell Soup shares tumbled 6.4 per cent to US$59.90 after disappointing sales.

Advancing issues outnumbered declining ones on the NYSE by 2,447 to 580, for a 4.22-to-1 ratio on the upside; on the Nasdaq, 2,151 issues rose and 667 fell for a 3.22-to-1 ratio favoring advancers.

The S&P 500 posted 14 new 52-week highs and one new low; the Nasdaq recorded 33 new highs and 31 new lows.

REUTERS