Dow closes more than 300 points higher, stocks snap 3-week Fed-induced slide

Pro Picks: Watch all of Friday's big stock calls on CNBC
Pro Picks: Watch all of Friday's big stock calls on CNBC

U.S. stocks rallied Friday as Wall Street caps off a strong weekly performance, recovering from a Federal Reserve-induced slump.

The Dow Jones Industrial Average gained 377.19 points, or about 1.19% to 32,151.71. The S&P 500 jumped 1.53% to 4,067.36, and the Nasdaq Composite climbed 2.11% to 12,112.31.

Shares of DocuSign surged more than 10% after the electronic agreements company reported an earnings beat. The company also issued a third-quarter revenue forecast that was above expectations.

All three major averages snapped a three-week losing streak. The Dow added 2.66% on the week, while the S&P 500 gained 3.65%. The Nasdaq Composite is 4.14% higher.

Stocks have been volatile recently as expectations of a 0.75 percentage point rate hike this month grew on Wall Street, after the Federal Reserve Chair Jerome Powell said again that he is "strongly committed" to bringing down inflation.

"The case for the ongoing bear market is that the Fed will continue to tighten monetary policy, withdraw liquidity from the market and cause a tailspin for equities," said David Donabedian, chief investment officer of CIBC Private Wealth U.S. "But this week's market recovery has shown there is continued resilience in the economy bolstered by favorable economic reports."

Still, Donabedian added that he does not think stocks have reached the bottom of the bear market yet.

"Indeed, the journey to the next bull market will take time, and will be marked by a series of set-backs and recoveries," he said.

Stocks close higher, snap three-week slump

All three major averages closed higher Friday, notching gains in the holiday-shortened week and snapping a three-week slump. The Dow rose 2.8% on the week, while the S&P 500 and the Nasdaq gained 3.8% and 4.2%, respectively.

The Dow Jones Industrial Average gained 377.19 points, or about 1.19% to 32,151.71. The S&P 500 jumped 1.53% to 4.067.36 and the Nasdaq Composite climbed 2.11% to 12,112.31.

—Carmen Reinicke

S&P 500 reclaims important technical zone, bigger test ahead

Market pros who follow charts see positive progress in the fact that the S&P 500 was able to reclaim its 50-day moving average in Friday's rally.

Strategists expect stocks could continue higher into the week ahead. As of 3:30 p.m., the market was on track to close out its first positive week in four with a big gain.

Stocks do face a key test in Tuesday's consumer price index, a data point that could help the Federal Reserve decide how much to raise interest rates later this month.

Loading chart...

If the S&P can hold the 50-day, now 4,030, that would be viewed as a sign of positive momentum. The 50-day is literally the average of the last 50 closes.

Oppenheimer's Ari Wald said the next challenge for the S&P 500 is to break back above its 200-day moving average, now at 4,275.

"The 200-day average is going to be an important one on the upside that was rejected in mid-August," he said. "That's often viewed as the demarcation line between bull and bear markets."

—Patti Domm

Cathie Wood's Ark Innovation among ETFs outperforming on Friday.

Some growth-focused ETFs are outperforming during Friday's broad market rally.

Cathie Wood's flagship Ark Innovation ETF has surged 4.1%, helped by a gain of 3.4% from Tesla. The Ark Innovation fund is still down more than 50% for the year and struggled to gain traction in July when much of the rest of the market was rallying.

Loading chart...

Elsewhere, the iShares Cybersecurity and Tech ETF has jumped 3.4%, and the cannabis-focused ETFMG Alternative Harvest ETF is up 3.4%. The Roundhill Sports Betting and Gaming ETF is up nearly 3%.

— Jesse Pound

Last hour of trading: stocks up

All three major averages were in the green Friday with one hour of trading left, heading for the first positive week in four.

The Dow Jones Industrial average gained 416 points, or 1.31%. The S&P 500 rose 1.57% and the Nasdaq jumped 2%.

Most sectors across the market were positive on the day.

—Carmen Reinicke

Stocks at session highs in early afternoon

Stocks reached session highs Friday afternoon as Wall Street attempts to snap a three-week slump over fears of aggressive rate hikes from the Federal Reserve.

The Dow Jones Industrial Average rallied more than 418 points, or 1.32%. The S&P 500 and the Nasdaq gained 1.61% and 2.14%, respectively.

—Carmen Reinicke

Oil rises to end the week

Oil prices rose Friday amid threats from Russia's Vladimir Putin that supply would be cut. West Texas Intermediate rose 3.57% to $86.53 a barrel and Brent crude gained 3.59% to $92.37 a barrel.

Despite the gains, oil is on track for another negative week overall.

- Carmen Reinicke

Moderating energy prices, soft landing hope spurred market this week, Hackett of Nationwide says

Though markets are on pace for a positive week, it's been a bumpy ride.

"Markets have been pressured by the gradual realization that the Fed is resolved to focus on inflation at the expense of growth and employment, but this week saw optimism over moderating energy prices and hope for a soft landing," said Mark Hackett, chief of investment research at Nationwide.

"The week had a notably "risk-on" tone, with the strength in aggressive growth, technology, and Bitcoin," he added.

Going forward, all eyes will be on next week's consumer price index report, he said.

"Markets bounced from oversold conditions, though next week will be critical to see if the "sell the rally" mindset of investors remains or if sentiment and momentum are poised to turn," said Hackett.

—Carmen Reinicke

Fed's Waller backs 'another significant increase' in interest rates this month

Federal Reserve Governor Christopher Waller said he sees a "significant" interest rate hike likely when the central bank meets Sept. 20-21.

With markets widely expecting a 0.75 percentage point increase in the benchmark funds rate, Waller said in Vienna that the decision should be "straightforward" though he did not commit to a specific level. He also encouraged his colleagues to abandon "forward guidance" about the future of policy and instead to let data dictate the approach.

"Looking ahead to our next meeting, I support another significant increase in the policy rate," he said. "But, looking further out, I can't tell you about the appropriate path of policy. The peak range and how fast we will move there will depend on data we will receive about the economy.

The Fed has approved consecutive three-quarter point increases, the sharpest moves in policy since the central bank began using the funds rate as its primary policy tool more than 30 years ago.

Waller's comments echo sentiments from his colleagues, who are determined to bring inflation down from its highest peak in more than 40 years.

—Jeff Cox

Stocks higher at midday, on track to break 3-week slump

All three major averages were higher in midday trading Friday, on track to break a three-week losing streak.

The Dow Jones Industrial average rose nearly 300 points, or 0.94%. The S&P 500 and the Nasdaq gained 1.19% and 1.70%, respectively.

—Carmen Reinicke

S&P 500 on track to close above 50-day moving average

With Friday's gains, the S&P 500 is on pace to close above its 50-day moving average level of 4,030.22 for the first time since Aug. 31, on an intraday basis.

In addition, the Nasdaq Composite is currently trading above its own 50-day level of 12,065.64 for the first time since Aug. 31 on an intraday basis. Russell 2000 small caps are on pace to close above their 50-day level for the first time since Aug. 30.

The Dow is currently lagging its moving average but moving towards it with today's gains. The index hasn't traded above its 50-day moving average level of 32,206.17 on an intraday basis. since Aug. 30

—Carmen Reinicke, Gina Francolla

All S&P 500 Sectors Positive

All sectors on the S&P 500 were positive Friday as the market looks to shake off three weeks of declines. Consumer services was up nearly 2%, boosted by Dish Network and Warner Brothers Discovery, up nearly 6% and 3.3%, respectively.

On the Dow Jones Industrial Average, all sectors were in the green as well, with producer manufacturing leading the index.

On the Nasdaq, all sectors except for communications were positive.

—Carmen Reinicke

CNBC's Next Gen 50 up nearly 9% this week

CNBC's Next Gen 50, a basket of stocks tied to next generation companies, is up 8.8% this week and on pace for its best weekly performance since Aug. 5.

Leaders of the group include Lyft and ChargePoint, which are both up more than 20% this week. Coinbase, 23andMe, DocuSign, Roblox and Upstart are all up more than 15% in the same timeframe.

Loading chart...

—Carmen Reinicke, Gina Francolla

Stocks jump at market open as Wall Street aims to break 3-week slump

U.S. stocks rose Friday as Wall Street looks to notch its first positive week in four.

The Dow Jones Industrial Average rose by 175 points, or 0.55%. The S&P 500 and Nasdaq Composite climbed 0.7% and 0.91%, respectively.

—Carmen Reinicke

Former Fed Vice Chair Clarida expects funds rate to rise to 4%

Richard Clarida think his former colleagues at the Federal Reserve aren't just spouting rhetoric about fighting inflation, and will back up the talk with more action.

"I think you've got to believe the Fed," Clarida, the central bank's vice chairman from 2018 until Jan. 10 of this year, told CNBC's "Squawk Box" in a live interview Friday. "The message I get is very clear: Failure is not an option for [Chairman] Jay Powell."

In terms of what that will mean for policy, he sees the fed funds rate benchmark climbing well above its current targeted range between 2.25%-2.5%. Clarida said he has been surprised at how unified policymakers are in their quest to use rate increases to bring down inflation.

"I think they're going to 4% hell or high water, if I had to put it into two boxes," he said. "Inflation is way too high."

The rate-setting Federal Open Market Committee meets Sept. 20-21, with markets widely anticipating a third consecutive 0.75 percentage point rate increase. Futures traders, however, are expecting the committee to stop short of a 4% funds rate next year.

In an appearance Thursday, Powell said he is "strongly committed" to bringing down inflation and will keep going "until the job is done."

—Jeff Cox

Investor sentiment falls again

Investor sentiment dropped again this week, with just 18.1% of respondents telling AAII they are bullish in the latest survey, down from 21.9% last week. Meanwhile, 53.3% of investors said they were bearish, up from 50.4% in the previous week.

This continues an abnormally long streak of bearishness. The bull/bear spread has been negative for 23 straight weeks, which the second-longest streak on record, according to Bespoke Investment Group.

— Jesse Pound

Scott Minerd calls for the S&P 500 to drop 20% by mid-October

Don't cheer this rebound as the bear market is still intact and a big sell-off is around the corner, said Scott Minerd, global chief investment officer at Guggenheim Partners.

"This is seasonally the worst time of the year," Minerd said on Thursday's "Closing Bell Overtime." "Given the recent strength of the last few days, it appears that people are ignoring the macro backdrop, monetary policy backdrop, which would basically indicate that the bear market is intact. Given where seasonals are and how far out of line we are historically with where the P/E is, we should see a really sharp adjustment in prices really fast."

The widely followed strategist called for the S&P 500 to decline 20% from here by mid-October, and he said it could be a buying opportunity for traders if and when the equity benchmark falls to the range of 3,000 to 3,400.

— Yun Li

Bernstein downgrades Virgin Galactic to sell

Bernstein downgraded shares of Virgin Galatic to underweight as the company delays its commercial space flights.

"Although we saw substantial risk for Virgin Galactic when we launched coverage, we believe the situation for the company has deteriorated over time," wrote analyst Douglas Harned in a note to clients.

CNBC Pro subscribers can read more on the downgrade here.

A negative EPS revision cycle will drive the next leg down: Wolf Research

Wolf Research believes bear markets come in phases.

The first has been about investors "coming to grips with the amount of central bank tightening that's likely to occur, which has driven down valuations," analysts wrote in a note Friday.

They expect the second leg down to be driven by falling global growth expectations and a negative earnings-per-share revision cycle. Over the past three months, overall S&P 500