Wall Street’s main indexes rose on Friday, boosted by technology and high-growth stocks, as investors awaited key inflation data next week to gauge the pace of interest rate hikes by the Federal Reserve.
In midday trading, the Dow Jones Industrial Average was up more than 300 points, or 1%, at 32,102, the S&P 500 was up 1.2% and the Nasdaq was up 1.8%.
Still, the S&P 500 and the Nasdaq are down nearly 6% and 8.3%, respectively, from their peaks hit in mid-August, as the Fed and other major central banks reaffirmed their commitment to bring down decades-high inflation.
US equities have stabilized this week after a sharp selloff that began in mid-August on worries about the impact of tighter monetary policy and a slowdown in Europe and China.
The indexes are on track to snap their three-week losing streak, despite hawkish remarks from Fed policymakers that boosted expectations of another outsize rate hike at the central bank’s Sept. 20-21 meeting.
“We got oversold in the last couple of weeks in August and this is a relief rally,” said Dennis Dick, head of markets structure at Triple D Trading.
“The market is, to a certain extent, getting ahead of next week’s CPI (consumer price index) data. It’s fairly predictable that the data next week is going to be light. We’ve had significant commodity deflation over the course of the last four weeks.”
Investors will watch for the August inflation report due next Tuesday for any signs that price pressures may be easing. It is expected to show that prices rose at an 8.1% pace over the year in August, compared with 8.5% for July.
Traders are pricing in an 86% chance of a 75-basis-point rate hike at the next meeting, up from 57% a week earlier, according to CME Group’s Fedwatch tool.
Fed Chair Jerome Powell said on Thursday that the US central bank is “strongly committed” to controlling inflation, but there remains hope it can be done without the “very high social costs” involved in previous inflation fights.
Several Fed policymakers including Fed Kansas City President Esther George, a voting member of the rate-setting committee this year, are scheduled to speak later in the day.
All 11 major S&P sectors traded higher, with communication services, technology and consumer discretionary leading the way.
High-growth stocks such as Tesla, Apple, Alphabet and Amazon gained more than 1% each.
The CBOE volatility index, a gauge of investor anxiety, fell to a two-week low of 22.9 but stayed above its long-term average of 20.