Wall Street posts first weekly gain since mid-August

Sept 9 (Reuters) – U.S. stocks rose on Friday, with major indexes posting their first weekly gain in four weeks as investors returned to a buying spree, shrugging off worries about the economic outlook.

The gains followed a sharp sell-off that began in mid-August, sparked by concerns about the impact of tighter monetary policy and signs of an economic slowdown in Europe and China.

Analysts said this week’s market recovery was more related to the previous oversold. Uncertainty remains high about inflation and the aggressiveness of the Federal Reserve in raising interest rates.

“It’s not surprising that we’re having a bit of a pullback as we’re getting here, as a lot of this is technical,” said Jack Janasiewicz, chief portfolio strategist and portfolio manager at Natixis Investment Managers Solutions.

“I wouldn’t be shocked if we start the week with a little bit more strength and then calm down and come back a little bit as we get ready for the CPI,” he added, looking ahead to next week.

Investors awaited the August consumer price index (CPI) report on Tuesday for any sign that inflation 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% in July.

Wells Fargo economists expect headline inflation to post its biggest monthly decline since the peak of the pandemic in April 2020, helped by a pullback in gas prices.

All 11 major S&P sectors traded higher on Friday, with communications services (.SPLRCL), technology (.SPLRCT), energy (.SPNY) and consumer discretionary (.SPLRCD) leading the way.

Controlled since the start of the year on worries about higher interest rates, high-growth stocks rallied on the week.

Fed Chairman Jerome Powell said on Thursday that the US central bank is “strongly committed” to controlling inflation, but hopes remain that it can be done without the “very high social costs” involved in the previous fight. of inflation. Read more

Several other Fed policymakers have also reiterated their commitment to fighting runaway inflation in recent weeks, leaving investors jittery about the prospects of another big interest rate hike from the Federal Reserve. Read more

Traders are pricing in a 90% chance of a 75 basis point rate hike at the next meeting, up from 57% a week ago, according to CME Group’s Fedwatch Tool.

The CBOE Volatility Index (.VIX), a gauge of investor anxiety, fell to a two-week low of 22.85 but held above its long-term average of around 20.

In preliminary data, the S&P 500 (.SPX) gained 61.44 points, or 1.53%, to end at 4,067.62, while the Nasdaq Composite (.IXIC) gained 249.94 points, or 2.12%, to 12,113.19. The Dow Jones Industrial Average (.DJI) rose 384.54 points, or 1.21%, to 32,157.88.

US equity funds recorded outflows of $11.5 billion in the week to Wednesday, their biggest outflow in 11 weeks, BofA said on Friday.

Kroger Co ( KR.N ) jumped after the grocer raised its annual forecast.

Shares of Tapestry Inc ( TPR.N ) also rose after the luxury bag maker said it expects revenue of $8 billion by fiscal 2025.

Reporting by Carolina Mandl, additional reporting by Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Anil D’Silva, Maju Samuel and Cynthia Osterman

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