Wall Street soars, on course to break longest weekly losing streak in decades

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NEW YORK – Wall Street extended its rally on Friday as signs of a spike in inflation and consumer resilience sent investors into the long holiday weekend with growing optimism that policy tightening the Federal Reserve can avoid tipping the economy into recession.

All three major U.S. stock indexes were up sharply and on course to break their longest weekly losing streaks in decades.

“We’re in one of those rebound periods,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “Does this mean that the market has found its bottom? We’ll have to see how much stamina this lead will have.

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“It feels good but something tells me the sale isn’t over,” Ghriskey added.

The S&P and Nasdaq suffered seven straight weekly declines, the longest since the end of the dot-com meltdown, while the Dow’s eight-week selloff was the longest since 1932.

In the S&P’s seven consecutive weeks of losses, the flagship index lost 14.2% of its value, from its April 1 close to May 20 on Friday, during which it threatened to confirm it was in a bear market since its record close on Jan. 3. .

“It was inevitable that the losing streak would end,” Ghriskey said. “Corrections and bear markets are followed by bull markets.”

Generally optimistic earnings forecasts and strong economic indicators have fueled hopes that the Fed’s hawkish maneuvers to contain decades-high inflation will not chill the economy into contraction.

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Data released on Friday showed better-than-expected consumer spending and seemed to confirm that inflation, which has dampened corporate earnings forecasts and weighed on investor sentiment, has peaked.

This, combined with the minutes of the central bank’s latest policy meeting, which reaffirmed its commitment to rein in the surge in prices while remaining sensitive to economic data, helped boost risk appetite.

The Dow Jones Industrial Average rose 342.23 points, or 1.05%, to 32,979.42, the S&P 500 gained 69.97 points, or 1.72%, to 4,127.81 and the Nasdaq Composite added 300.70 points, or 2.56%, to 12,041.35.

All 11 major sectors of the S&P 500 were in positive territory amid light trading, with real estate and technology enjoying the largest percentage gains.

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Shares of Apple Inc, Microsoft Corp and Tesla Inc provided the biggest gain.

The first-quarter earnings season is largely in the bag, with 488 of the S&P 500 companies reporting. Of these, 77% exceeded consensus expectations, according to Refinitiv.

Ulta Beauty gained 10.4% following its upbeat quarterly earnings report.

Hardware company Dell Technologies Inc jumped 12.1% after beating quarterly profit and revenue estimates.

Clothing retailers Gap Inc and American Eagle Outfitters cut their full-year profit forecasts. The latter fell 5.5%, while the former rebounded and was the latter up 2.9%.

Trading volumes are expected to be light ahead of the long weekend as U.S. stock markets are closed Monday for Memorial Day.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 5.96 to 1; on the Nasdaq, a ratio of 3.77 to 1 favored advancers.

The S&P 500 posted 3 new 52-week highs and 29 new lows; the Nasdaq Composite recorded 36 new highs and 75 new lows. (Reporting by Stephen Culp in New York Additional reporting by Devik Jain and Anisha Sircar in Bengaluru Editing by Vinay Dwivedi and Matthew Lewis)

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