The S&P 500 closed out its best week since June as a report on Thursday showing slowing inflation raised hopes that the Federal Reserve would soon slow its tightening campaign.
The broader market index added 0.9%, to close at 3,992.93. This brought its gain for the week to 5.9%, its best week since the one ended June 24 of this year. The Nasdaq Composite added about 1.9% to end at 11,323.33 as investors snapped up tech shares on hopes interest rates would ease. The Dow Jones Industrial Average gained 0.1%, closing at 33,747.86.
Tech stocks on Friday shook off a decline in cryptocurrencies. Virtual currencies tumbled sharply this week and once again came under pressure Friday after FTX filed for bankruptcy protection, and CEO Sam Bankman-Fried resigned. Bitcoin and ether both declined.
Still, tech stocks and related crypto stocks rebounded after opening lower Friday. The tech sector in the S&P 500 surged 10% through Friday, its best weekly performance since April 2020. Amazon was up more than 4% on Friday, while Google-parent Alphabet was 2.6% higher.
The Dow jumped more than 1,200 points on Thursday following a smaller-than-expected rise in consumer prices for the month of October, giving investors hope that inflation may be cooling. The S&P rose 5.5%, and the Nasdaq Composite surged about 7.4%. It was the best day since 2020 for all three indexes.
Treasury yields plunged Thursday on the back of the weaker-than-expected inflation print. The bond market was closed on Friday to observe Veterans Day.
"From an equity market perspective, as long as the threat of much higher rates is out the way, this should remove a major headwind," Barclays' head of European equity strategy Emmanuel Cau wrote in a Friday note.
All of the indexes posted a winning week. The Dow was up 4.1% on a weekly basis, while the Nasdaq Composite advanced 8.1%. The week marked a resumption of a comeback rally for the bear market, which began in mid-October.
Stocks close higher
The S&P 500 closed out its best week since June, adding 5.9% this week, amid hopes that the Federal Reserve would soon slow its tightening campaign.
The broader market index added 0.9% on Friday. The Nasdaq Composite added 1.9% as investors snapped up tech shares on hopes interest rates would ease. The Dow Jones Industrial Average gained 0.1%.
— Sarah Min
Citigroup shares pop 10% since Thursday on weaker dollar
Citigroup shares gained more than 10% over the past two trading sessions after signs of cooling inflation led to a drop in the U.S. dollar.
The bank's stock rose 3.7% on Friday, following a 6.8% gain in the previous session, which was triggered by Thursday's better-than-expected CPI report. The dollar was headed for its biggest two-day drop since 2009.
Citigroup, led by CEO Jane Fraser, is the most global of large U.S. banks, even after announcing plans to exit at least 13 markets. The weakening dollar reduces pressure on emerging markets and makes overseas revenue more valuable.
"The past two days, we've seen a big relief rally in stocks resulting from lower interest rate expectations and the weakening dollar," said JMP securities analyst Devin Ryan. "That's been more pronounced in companies with significant businesses outside of the US. Citigroup generated more than two-thirds of its revenue outside the U.S."
Citigroup's rise exceeds that of rival lenders, which are more focused on U.S. retail and business customers. The 24-company KBW Bank Index rose 6.8% since Thursday.
Shares of the New York-based bank are still down 17% this year.
It would be a 'mistake' to go back to the old market leaders such as tech, Strategas says
Strategas' Chris Verrone warns investors against returning to the old market leaders such as tech, saying they remain "broken" even as this week's rally prompted a pivot into stocks most hit by surging inflation and interest rates.
"It's so tempting to want to go back to the old leaders, to go back to the top of the market, the techs, the Apples," Verrone said Friday on CNBC's "Closing Bell." "I think that would be the mistake here."
Instead, Verrone said investors should look to some of the sectors that have already outperformed in 2022. He said energy could demand a larger weighting in the index from here, and recommended adding to financials.
— Sarah Min
Citi warns of a difficult holiday season for Foot Locker without Yeezys
Citi opened a negative catalyst watch on Foot Locker, warning of a difficult holiday season ahead for the retailer given its reliance on Yeezys.
Analyst Paul Lejuez lowered his fourth-quarter and fiscal year 2023 estimates, and reduced his price target, saying there are challenges ahead for Foot Locker even if beats expectations in its third quarter earnings report later this month.
"We anticipate a modest EPS beat in 3Q (BMO 11/18). However, the focus will be on 4Q guidance given Adi's decision to cut ties with the Yeezy brand," Lejuez wrote in a Friday note.
The brand came under pressure after Ye, formerly known as Kanye West, made antisemitic comments that prompted Adidas and other companies to cut ties with the rapper. According to Lejuez, Foot Locker "leaned into its partnership" with Adidas to offset a loss with Nike, as the latter ramped up its direct to consumer business.
"Our checks suggest there will be no Yeezy product in stores in 4Q (FL stores boxed up the products and sent them back to Adidas). That means FL is going into the all-important holiday qtr (when the highest proportion of Yeezy/Jordan launch activity takes place) with significantly fewer Jordan Retros and no Yeezys," he wrote.
"We believe this will be significant headwind to 4Q comps," he wrote.
The analyst lowered his price target to $33 from $38. It's about in line with where shares were trading Friday.
— Sarah Min, Michael Bloom
Stocks rise to session highs in afternoon trading
Stocks climbed to session highs with the S&P 500 up 1.05%, as of 2:35 p.m. ET.
The Dow Jones Industrial Average rose 0.12%, after trading in negative territory for the better part of the day. The Nasdaq Composite jumped 2.03%.
— Sarah Min