A monthlong bounce from bear market lows gathered strength in US stocks Friday as Apple Inc.’s earnings report helped technology shares salvage their week and a smattering of economic data suggested a modicum of progress is being made in the Federal Reserve’s war against inflation.
(Bloomberg) — A monthlong bounce from bear market lows gathered strength in US stocks Friday as Apple Inc.’s earnings report helped technology shares salvage their week and a smattering of economic data suggested a modicum of progress is being made in the Federal Reserve’s war against inflation.
The S&P 500 and the tech-heavy Nasdaq 100 rose more than 2%.
While Apple drove Friday’s relief rally, shares of Microsoft Corp. and Google parent Alphabet Inc. also climbed, snapping a two-day decline.
Friday’s bounce is a departure from the somber sentiment that roiled markets this week.
Investors were on the edge as lackluster earnings from big-tech firms including Amazon, Alphabet and Meta Platforms Inc. rolled in, underscoring the impact of the Fed’s tightening regime. Despite a mostly upbeat report, Apple too warned of a holiday slowdown, hinting at more pain to come.
Data has also been mixed all week.
A core gauge of US inflation accelerated in September, while consumer spending stayed resilient, bolstering the Fed’s case for another jumbo rate hike next week. But a contraction in manufacturing and services, and lower-than-expected US home sales, indicated that Fed tightening is already hitting the economy.
Economists are still expecting the Fed to raise rates by three-quarters of a percentage point for the fourth time in a row next week.
Treasuries remained weaker as hopes of a pivot fizzled.
“It is too early to expect the Fed to signal a more dovish stance,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“We maintain our view for economic growth to bottom out in the middle of 2023 and for the Fed to stop hiking in 1Q23.”
Read More: US Core PCE Inflation Picks Up While Consumers Show Resilience
Beyond the US
The ECB delivered a second straight 75 basis-point hike on Thursday but dropped a prior reference to rate increases continuing for “several meetings,” an outcome that was considered dovish.
The central bank has a small margin for error after German inflation unexpectedly accelerated this month to 11.6% from a year earlier — far exceeding all estimates in a Bloomberg survey whose median forecast was 10.9%.
The Bank of Japan held its negative rate, 10-year yield cap and asset purchases at the end of a two-day policy meeting, in line with the view of 49 economists surveyed by Bloomberg.
Chinese assets remain in focus, with foreign investors dumping a record amount of mainland China stocks this week and sending Hong Kong equities to a 13-year low.
President Xi Jinping’s tightening grip on power hasn’t had the same impact domestically, with mainland investors hunting for bargains in Hong Kong.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 2% as of 2:08 p.m.
New York time
- The Nasdaq 100 rose 2.6%
- The Dow Jones Industrial Average rose 2.3%
- The MSCI World index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.2% to $0.9942
- The British pound rose 0.2% to $1.1592
- The Japanese yen fell 0.9% to 147.64 per dollar
Cryptocurrencies
- Bitcoin rose 1.1% to $20,616.69
- Ether rose 1.7% to $1,553.09
Bonds
- The yield on 10-year Treasuries advanced nine basis points to 4.01%
- Germany’s 10-year yield advanced 14 basis points to 2.10%
- Britain’s 10-year yield advanced eight basis points to 3.48%
Commodities
- West Texas Intermediate crude fell 1.8% to $87.49 a barrel
- Gold futures fell 1.3% to $1,644.30 an ounce
–With assistance from Michael Msika, Kurt Schussler, Allegra Catelli, Cecile Gutscher, Brett Miller and Reade Pickert.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
