S&P 500 gains Friday as it heads for its best week since June

The S&P 500 gained on Friday and headed for its best week since June as a report showing slowing inflation on Thursday raised hopes that the Federal Reserve would soon ease its tightening campaign.

The S&P 500 added 0.1%, taking its gain for the week to more than 5%, its best week since that ended June 24 of this year. The Nasdaq Composite gained 0.7% as investors continued to buy tech stocks on hopes that interest rates would ease. The Dow Jones Industrial average was the outlier, losing 0.7% as shares of defensive stocks UnitedHealth and Merck fell.

The Dow Jones jumped more than 1,200 points on Thursday after weaker-than-expected consumer price inflation for October, giving investors hope for a slowdown in inflation. The S&P rose 5.5% and the Nasdaq Composite jumped about 7.4%. It was the best day since 2020 for all three.

Treasury yields plunged on Thursday due to a weaker-than-expected inflation rate and continued to fall on Friday. The 10-year Treasury yield was 3.82% on Friday after ending last week at 4.16%.

“From a stock market perspective, as long as the threat of much higher rates is gone, this should remove a major headwind,” Barclays’ Emmanuel Cau wrote in a Friday note.

On Friday, tech stocks rocked a drop in cryptocurrencies, which came under pressure on Friday after FTX announced its bankruptcy filing and CEO Sam Bankman-Fried stepped down. Bitcoin fell 6% and Ether more than 7%. Tech stocks and related crypto stocks rebounded after opening lower on Friday.

All indices are at the rate of a winning week. The Dow is up 4% on a weekly basis, while the Nasdaq Composite is up more than 7%. This week marks the resumption of a comeback rally for the bear market that began in mid-October but has stalled in recent weeks. The S&P 500 is now up nearly 14% from its bear market low, but still down 16% for the year.

“Yesterday’s strength was notable, it was remarkable, it was historically significant, but it’s one day. It’s only one day. And we can’t read that too much when we’re still in a period volatile in a downtrend and challenging macro environment,” said Bill Merz of US Bank Wealth Management.

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