Michael M. Santiago
U.S. stocks on Friday rose, as markets appeared to shrug off Federal Reserve chair Jerome Powell’s attempts to tone dovish expectations in the previous session. Treasury yields stabilized a day after a big bond sell-off due to a weak government auction.
The Nasdaq Composite (COMP.IND) led gains among Wall Street’s major averages, rising 1.27% to 13,693.20 points in mid-day trade. The tech-heavy index was buoyed by chip stocks amid a Bloomberg News report that a Chinese artificial intelligence startup had bought enough of Nvidia’s (NVDA) chips before U.S. export curbs kicked in.
The S&P 500 (SP500) was up 0.81% to 4,382.61 points. The benchmark index on Thursday missed out on what would have been a rare nine-day win streak, which has happened only 31 times since 1928.
The blue-chip Dow (DJI) added 0.51% to 34,063.14 points, though gains were capped by a pullback in Walt Disney (DIS) following a quarterly results-driven surge the previous day.
For the week, the Nasdaq is up 1.59%, the S&P is up 0.56% and the Dow is up marginally by 0.01%.
All 11 S&P sectors were in positive territory, with the exception of Health Care. Technology and Communication Services led the gainers.
On Thursday, Fed chair Powell at a conference hosted by the International Monetary Fund said that the central bank was “not confident” it had achieved a level of sufficiently restrictive monetary policy to bring inflation down to its 2% target.
Those comments weighed on sentiment, reminding markets that Fed rhetoric will likely continue to stay hawkish until further improvement is seen in inflation. Next week’s consumer price index report will be in focus for any such indications.
Friday’s economic calendar saw the University of Michigan’s gauge of consumer sentiment weakening for a fourth straight month in November. Moreover, year-ahead inflation expectations reached their highest level since April.
“The University of Michigan’s Consumer Sentiment Index fell to 60.4 in November. That marks the lowest point for sentiment since May, and it was lower than any of the 50 economists who submitted a forecast on Bloomberg,” Wells Fargo’s Tim Quinlan said.
“The bummed-out vibe can be attributed to the fact that consumers are waking up to the reality of a much higher interest rate environment and renewed concerns about inflation. Those price expectations have been flagged by Fed Chair Powell in the past as a key input for policymakers,” Quinlan added.
Treasury yields on Friday were mixed. They had surged the previous day, especially the longer-end maturities, after a closely watched $24B 30-year note auction tailed by its biggest margin ever.
The 30-year yield (US30Y) was last down 5 basis points to 4.72%, while the 10-year yield (US10Y) was down 1 basis points to 4.62%. The shorter-end more rate-sensitive 2-year yield (US2Y) was up 3 basis points to 5.05%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Dallas Fed President Lorie Logan and Atlanta Fed President Raphael Bostic wrap up the blitzkrieg of Fed speakers this week. Both have spoken recently, with Logan watching to see if financial conditions are tight enough and Bostic saying policy looks sufficiently restrictive.
Turning to active movers, Illumina (ILMN) was the top percentage loser on the S&P 500 (SP500), after the generic testing and sequencing company cut its full year profit guidance for a second straight quarter.
Conversely, Hologic (HOLX) was the top S&P percentage loser, after the medical devices firm reported a quarterly top and bottom line beat.