The Dow jumped 150 points on Friday as investors shrugged off fears of higher rates
Stocks rose on Friday as investors pored over the latest earnings report and tried to shake off dovish speech from Federal Reserve speakers.
The Dow Jones Industrial Average jumped 162 points, or 0.5%. The S&P 500 rose 0.2% and the Nasdaq Composite traded slightly above the flat line.
The S&P and Nasdaq are down for weeks, trading down 0.5% and 1%, respectively. The Dow is currently flat on the week. However, all three are positive for the month.
Ross Stores and Palo Alto Networks popped after the two companies announced their latest quarterly results. Investors also seemed to be cheering Gap’s latest results.
Friday’s moves came after a session down on Wall Street in which comments from Fed officials raised concerns about tighter US monetary policy.
President of the Federal Reserve St. Louisa James Bullard he said on Thursday that “the political rate is not yet in a zone that can be considered sufficiently restrictive.” He suggested that the appropriate zone for the federal funds rate could be in the range of 5% to 7%, which is higher than the market price.
“We still think investors should put much more emphasis on the real data and not focus too much on the Fed’s rhetoric (the former will show where inflation is going, while the latter is fixated on where it has been),” said Adam Crisafulli, founder of Vital Knowledge. “Even so, investors are tired of fighting the Fed’s daily bomb bars, and the fear is that it may take another 2-3 CPI for officials to stop admonishing the market every time it tries to recover.”
Investors have been responding in recent weeks to any new economic data or any language that might indicate what the Fed will do next with interest rates. Shelby McFaddin, investment analyst at Motley Fool Asset Management, said the comments about inflation led investors to believe the Fed doesn’t think the economy has cooled enough.
“There was absolutely a thirst for relief and a tug of war,” she said of the investor response in recent days. “But at the end of the day, it really just depends on whether this inflationary period becomes more deflationary than it has been growing, and what the Fed does next.”
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