Wall Street closed with gains and capped a positive week hand in hand with the drop in inflation in the United States

Workers at the New York Stock Exchange (REUTERS/Andrew Kelly) (ANDREW KELLY/)

Stocks rose on Friday, capping a week of positives, sending Wall Street to its best level since September. Shortly before the close, the S&P 500 was up 0.2%, the Dow Jones was up 0.1% and the Nasdaq was up 1%.

At the head of the climb stood amexpress, which rose 11.3% despite lower-than-expected profit and revenue last quarter. Its profit forecast through 2023 exceeded Wall Street expectations and it announced an expected increase in its dividend.

Another big rise in stocks Tesla it also supported the market. It rose 12.1% following its stronger-than-expected late-2022 earnings report released earlier in the week.

Operators work on the New York Stock Exchange (REUTERS/Andrew Kelly)
Operators work on the New York Stock Exchange (REUTERS/Andrew Kelly) (ANDREW KELLY/)

These gains helped offset heavy losses in Intel following the alarming warning from the chipmaker. Not only did its revenue and profit miss expectations last quarter amid a punishing slowdown in sales, but it also gave a revenue forecast for this quarter that was more than $2 billion below analysts’ expectations. Intel fell 6.8%.

Hasbro it fell 7.5% after saying it underperformed last holiday shopping season and was likely to post a 17% drop in fourth-quarter revenue. The company will cut some 1,000 jobs to reduce costs.

Until now, the working market it has remained remarkably resilient despite the slowdown in the broader economy. Nearly all of the biggest layoffs have been in the tech sector, which rushed to expand after the pandemic skyrocketed demand for technology. But the layoffs may be starting to spread to other sectors.

Earnings season is getting into full swing, and companies have been offering results and forecasts disparate. That has helped cause big swings in the markets.

Lately, two big competing ideas have sent Wall Street up, down, and back up again. On the one hand, concerns about a sharp fall in profits and a serious recession of the economy after all the rises in prices interest rates applied by the Federal Reserve last year to crush the inflation. On the other, the hope that the inflation cooling allow the Federal Reserve to lower rates.

FILE PHOTO: The Wall Street entrance to the New York Stock Exchange (REUTERS/Brendan McDermid)
FILE PHOTO: The Wall Street entrance to the New York Stock Exchange (REUTERS/Brendan McDermid) (BRENDAN MCDERMID/)

The market is partly trying to reconcile that weak earnings and falling demand may be necessary for inflation to cool further, said Keith Buchanan, a portfolio manager at Globalt Investments. “It’s like this is the medicine the economy has to take,” he said.

Economic reports on Friday supported recent data suggesting that inflation continues to moderate. The Federal Reserve’s preferred measure, which excludes food and energy costs, was 4.4% higher in December than the previous year. This figure, lower than the 4.7% of November, matches the expectations of economists.

More broadly, inflation slowed to 5% in December, from 5.5% in November, according to the personal consumption expenditures price index.

The reports also showed that income growth for Americans slowed in December, while consumer spending fell slightly more than expected.

According to another report, the US consumers they are also lowering their inflation expectations for the coming year. In the long term, according to the University of Michigan, consumer inflation expectations remain more or less at the level of the last 18 months.

Keeping those expectations anchored is key for the Federal Reserve, which wants to avoid a vicious circle in which households that expect high inflation make moves that only make it worse.

According to economists, Friday’s data is likely to keep the Federal Reserve on track to raise its benchmark rate by 0.25 percentage points at their meeting next week. This would be a step back from last month’s 0.50 point rise and the previous four consecutive 0.75 point rises.

Some minor increases would mean a lower pressure added on the economy, which has already suffered damage in the housing sector and other areas due to the rate hike last year.

The yield on the 10-year Treasury note, which sets rates for mortgages and other major loans, rose to 3.52% from 3.51% on Thursday. The two-year yield, which moves more in line with expectations for Federal Reserve stock, rose to 4.21% from 4.19%.

Next week could be a busy one for the markets, with several high level events in addition to the Federal Reserve announcement. The European Central Bank will release its latest rate decision, the US government will release its latest monthly labor market report and more than 100 S&P 500 companies will present their quarterly results.

In overseas stock markets, the Indian Sensex fell 1.5% as the Adani group was hit again by heavy selling. Shares of seven Adani companies have plunged this week, wiping out billions of dollars in market value, after short-selling firm Hindenburg Research said it was betting against the conglomerate, which has interests in energy, transmission data, construction and other major industries.

(With information from AP)

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