Wall Street closes sharply higher and posts weekly gains as Treasury yields ease

NEW YORK, March 3 (Reuters) – Wall Street rallied on Friday to end a volatile week as U.S. Treasury yields eased and economic data helped investors ride past the growing likelihood that the Federal Reserve must keep its restrictive policy in place until later in the year.

The three major U.S. stock indexes jumped more than 1%, with the tech-laden Nasdaq climbing nearly 2% on a boost from interest-rate-sensitive megacaps. US Treasury yields eased on comments from Fed officials that eased inflation and interest rate fears.

“It’s all about the Fed and how it can gracefully slow the economy,” said David Carter, managing director of JPMorgan Private Bank in New York. “The Fed is telling the markets what they want to hear, but also injecting caution that rates may need to rise depending on economic data.”

For the week, the indices posted gains, with the S&P posting a three-week losing streak and the Dow Jones, returning to positive territory since the start of the year, saw its first weekly advance since late January.

The week also saw the benchmark S&P 500 cross its 50- and 200-day moving averages, two closely watched technical levels.

“It’s an indication that a shift is happening,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “And a lot of people are suspicious of that, but they don’t want to be left behind.”

Economic data released on Friday showed stable demand for services, with the Institute for Supply Management and S&P Global’s Purchasing Managers’ Indexes (PMIs) indicating that activity in the sector continues to expand even as prices inputs decrease.

“Investors saw what they wanted in the ISM data, which was basically healthy growth with prices slowing,” Carter added. “This suggests they are willing to stay on the plane as they are less worried about landing.”

The Dow Jones Industrial Average (.DJI) rose 387.4 points, or 1.17%, to 33,390.97, the S&P 500 (.SPX) gained 64.29 points, or 1.61%, to 4,045.64 and the Nasdaq Composite (.IXIC) added 226.02 points, or 1.97%, to 11,689.01.

All 11 major S&P 500 sectors ended the session green, with technology (.SPLRCT) and consumer discretionary (.SPLRCD) enjoying the largest percentage gains.

The fourth-quarter earnings season is on the home stretch, with all but seven S&P 500 companies reporting. Earnings for the quarter beat consensus estimates 68% of the time, according to Refinitiv.

Still, overall, analysts estimate S&P 500 earnings will have fallen 3.2% in the fourth quarter from a year earlier, and expect negative year-on-year numbers for the first two quarters. of 2023. This would imply that the S&P 500 entered a three-quarter earnings slump in the final months of 2022, per Refinitiv.

Apple Inc (AAPL.O) jumped 3.5% after Morgan Stanley said the stock could rebound more than 20% this year on a possible hardware subscription.

Broadcom Inc (AVGO.O) rose 5.7% after the chipmaker forecast second-quarter revenue above analysts’ estimates as increased investment in AI boosted demand for the chips.

Among the losers, Costco Wholesale Corp (COST.O) slid 2.1% on the heels of its revenue loss as high inflation dampened consumer demand.

Chipmaker Marvell Technology Inc (MRVL.O) fell 4.7% on the company’s quarterly revenue shortfall and disappointing revenue forecast.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 4.54 to 1; on the Nasdaq, a ratio of 2.36 to 1 favored advancers.

The S&P 500 posted 23 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 79 new highs and 57 new lows.

Volume on U.S. exchanges was 10.83 billion shares, compared to an average of 11.10 billion over the past 20 trading days.

Reporting by Stephen Culp; Additional reporting by Sruthi Shankar in Bengaluru; Editing by Cynthia Osterman

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