US: Wall Street closes sharply higher, notches weekly gains as Treasury yields ease

WALL Street rallied on Friday (Mar 3) to end a volatile week, as US Treasury yields eased and economic data helped investors look past the growing likelihood that the Federal Reserve will have to keep its restrictive policy in place until late in the year.

All three major US stock indexes surged more than 1 per cent, with the tech-laden Nasdaq climbing close to 2 per cent with a boost from interest rate sensitive megacaps. US Treasury yields eased in the wake of comments from Fed officials that calmed fears over inflation and interest rates.

“It continues to be all about the Fed and how gracefully they can slow the economy,” said David Carter, managing director at JPMorgan Private Bank in New York. “The Fed is telling markets what they want to hear but also injecting the caution that rates may need to go higher depending on the economic data.”

For the week, the indexes notched gains, with the S&P snapping a three-week losing streak and the Dow, returning to positive territory year to date, and enjoyed its first weekly advance since late January.

The week also saw the benchmark S&P 500 break through its 50 and 200-day moving averages, two closely watched technical levels.

“It’s an indication that a shift is transpiring,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “And a lot of people are suspect of it, but they don’t want to be left behind.”

Economic data released on Friday showed steady demand for services, with purchasing managers’ indexes from the Institute for Supply Management (ISM) and S&P Global indicating that activity in the sector continues to expand even as input prices cool.

“Investors saw what they wanted in the ISM data, which was basically healthy growth with slowing prices,” Carter added. “It suggests they are willing to stay on the plane as they are less worried about the landing.”

The Dow Jones Industrial Average rose 387.4 points or 1.17 per cent to 33,390.97, the S&P 500 gained 64.29 points or 1.61 per cent to 4,045.64 and the Nasdaq Composite added 226.02 points or 1.97 per cent to 11,689.01.

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All 11 major sectors of the S&P 500 ended the session green, with tech and consumer discretionary enjoying the largest percentage gains.

Fourth-quarter earnings season is on the final stretch, with all but seven of the companies in the S&P 500 having reported. Results for the quarter have beaten consensus estimates 68 per cent of the time, according to Refinitiv.

Still, on aggregate, analysts believe S&P 500 earnings will have fallen 3.2 per cent in the fourth quarter compared to the prior year, and expect negative year-on-year numbers for the first two quarters of 2023. This would imply the S&P 500 entered a three-quarter earnings recession in the closing months of 2022, per Refinitiv.

Apple jumped 3.5 per cent after Morgan Stanley said the stock could rally more than 20 per cent this year on a potential hardware subscription.

Broadcom advanced 5.7 per cent after the chipmaker forecast second-quarter revenue above analysts’ estimates, as increased investments in artificial intelligence spurred demand for chips.

Among losers, Costco Wholesale slipped 2.1 per cent on the heels of its revenue miss, as high inflation dampened consumer demand.

Chipmaker Marvell Technology slid 4.7 per cent in the wake of the company’s quarterly profit miss and disappointing revenue forecast.

Advancing issues outnumbered declining ones on the New York Stock Exchange by a 4.54-to-1 ratio; on Nasdaq, a 2.36-to-1 ratio favoured advancers.

The S&P 500 posted 23 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 79 new highs and 57 new lows.

Volume on US exchanges was 10.83 billion shares, compared with the 11.1 billion average over the last 20 trading days. REUTERS