Stock Market News Live Updates: Stock Gains Accelerate Into the Close: S&P 500 Adds 2.4%

Stocks rose as the day came to a close, reversing earlier losses on Friday as investors digested earnings reports from several major technology companies and another hot inflation print at the end of another volatile week.

The S& P 500 finished up 2.4 percent, extending its weekly gain and snapping a three-week losing streak.

The Dow finished 1.65 percent higher, while the Nasdaq gained 3 percent. Despite supply chain problems, Apple (AAPL) led the way higher as the iPhone manufacturer reported record quarterly sales and better-than-expected profitability.

Meanwhile, Robinhood (HOOD) shares recovered overnight losses to trade higher after the trading platform reported lower-than-expected quarterly revenue, a larger-than-expected quarterly fall in users, and disappointing expectations.

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New economic data was in the spotlight on Friday. The latest inflation data revealed another multi-decade high rate of price increases. The Personal Consumption Expenditures (PCE) index rose 5.8 percent year on year in December, the most significant increase since 1982.

Core PCE, which excludes more variable food and energy expenses, grew at a 4.9 percent annual rate, the fastest since 1983. Reflecting on Thursday’s closing prices, the S& P 500 was on track to suffer a weekly loss of approximately 1.3 percent.

New data indicating a higher-than-expected increase in fourth-quarter US GDP and an improvement in weekly unemployment claims did nothing to lift equities on Thursday.

The Dow and Nasdaq have both declined in the last week, with volatility increasing as traders assessed the ramifications of the Federal Reserve’s more aggressive monetary policy tilt for markets.

“The markets processed this hawkish Fed turn, which I believe shocked many in terms of its scale,” Scott Crowe, chief investment strategist at CenterSquare Investment Management, said on Yahoo Finance Live on Thursday.

“It wasn’t long ago that they were referring to inflation as ‘transitory,’ but today their focus is squarely on inflation moderation. And I believe it has caused the market indigestion as it begins to comprehend that somewhat abrupt move.”

Stock market news
Stock market news

Earlier this week, Federal Reserve Chair Jerome Powell hinted that interest rates would rise above their current near-zero levels in March. However, other issues persisted, including how rapidly the Fed will increase interest rates and when and how swiftly the Fed will begin reducing its almost $9 trillion balance sheet and tightening financial conditions.

“All that the Fed is doing now, we believe has been priced in over the last few weeks. And this is where a lot of the market’s decline has come from, “Kathy Entwistle, Managing Director at Morgan Stanley, told Yahoo Finance Live on Thursday.

“And the big question is, will we slip even further? What’s going on?”. “We’re trying to look at companies and their revenues… to see if we’re going to have a little bit more of a market pullback or not,” she added.

“And this is based on what they can achieve in the future and where their prospects lie. And there’s been a lot of talk about inflation lately. When you consider a 7% inflation rate, that’s very considerable “fictive.”

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“Back in the fall, it was the individual investor who was keeping the market afloat,” Entwistle explained. “And now, their feelings have shifted, and they are less hopeful about where we are right now. So, we must consider all of these factors. We believe that, once again, quality will outperform growth.”

4:57 P.M. Et: Apple Posts Most Significant Jump Since July 2020 After Earnings

Apple’s record fourth-quarter revenue and earnings aided the stock’s most significant gain in a year and a half. Shares rose about 7% on Friday alone, helping to recover previous losses following a technology sector crash in January.

Through Friday’s closing, Apple shares were still down 4% for the month. Nonetheless, the company outpaced the S& P 500, which has lost by 7% thus far in January.

12:35 P.m. Et: Robinhood Shares Rise Despite Poor Quarterly Earnings, but the Company Is Still Down Roughly 70% Since Its IPO

Robinhood, a prominent digital trading platform among individual investors, has seen its shares fall by around 67.5 percent since its initial public offering in July 2021.

According to Bloomberg statistics, this has positioned the company among the worst-performing IPOs during the epidemic era, with companies like the Chinese ride-hailing firm Didi Global (DIDI).

Though the stock regained some of its losses during intraday trading on Friday, it had dropped by more than 10% during the overnight session following the company’s poor quarterly reports.

Net sales were $362.7 million, significantly below the $370.9 million predicted. In addition, monthly active users fell by 8.5 percent to 17.3 million, a larger-than-expected quarter-over-quarter reduction. Consensus experts predicted 19.9 million monthly users.

10:45 A.M. Et: ‘We’re Still Speaking About Closer to Four Rate Rises Factored in for 2022,’ Says One Analyst. Strategist

In a recent note, Bank of America analysts said that they anticipate the Fed to raise interest rates by 25 basis points seven times this year, reflecting one of the more hawkish forecasts for the central bank’s future course.

Meanwhile, as per DailyFX.com senior strategist Christopher Vecchio, this is unlikely to be the Fed’s final course. Nonetheless, the highly hawkish forecast demonstrates how much more aggressive many market people now expect the Fed to be.

“I do believe that some investors will see this as an indication that the tides have flipped fairly substantially in terms of expectations surrounding Fed policy,” Vecchio said when questioned about Bank of America’s interest rate forecast.

“The market itself, when you look at a range of indicators — eurodollar futures contracts, Fed funds futures — we’re still talking about closer to four rate rises priced in for 2022.”

“So the truth to the matter is that there is this gap between what certain banks are saying and what banks talk about in their books, in part because rising net interest margins would benefit their bottom line,” he said.

“There is a mismatch between what banks expect and what the market predicts.” “Historically speaking, the market has been quite bad at guessing which direction the Fed would go,” Vecchio said.

“It’s always been either too aggressive or too dovish — it’s never found that sweet spot where it ends up nailing the real path of interest rate rises. So, as the data changes, as we progress through the year, the Fed’s sensitivity to inflation, and, more crucially, to supply chain difficulties, will mainly define how quickly it moves.”

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10:03 A.M. Et: Consumer Confidence Plummeted to Its Lowest Level Since 2011 in Late January, According to the University of Michigan

A carefully monitored consumer mood indicator fell at the end of January to its lowest level in a decade, indicating that people were increasingly anxious about rising costs, the ongoing pandemic, and mounting geopolitical dangers.

The official January consumer mood index from the University of Michigan dipped to 67.2, down from a preliminary estimate of 68.8 earlier in the month. This was the lowest score since November of 2011.

In addition, the subindices monitoring consumers’ expectations for future circumstances and their judgments of current economic conditions declined throughout the month.

“Overall trust in government economic policies is at its lowest level since 2014, and large geopolitical concerns may add to the already aggressive clashes with other nations,” noted Richard Curtin, head economist for the University of Michigan’s Surveys of Consumers, in a news release.

“While rising inflation and declining real incomes are their top concerns, consumers may view the Fed’s policy actions to slow the economy as part of the issue rather than part of the solution,” he said.

“The concern is that consumers may overreact to these little nudges, especially given the uncertainty surrounding the coronavirus and other elevated geopolitical dangers.”

8:37 A.M. Et: Personal Income Rises at a Slow Pace in December, While Expenditure Falls.

In December, personal income in the United States climbed at a sluggish pace, the slowest increase since September, as pandemic-era government aid programs dwindled.

According to the Bureau of Economic Analysis, personal income increased at a 0.3 percent month-on-month rate in December, falling short of the 0.5 percent increase predicted by Bloomberg consensus statistics.

In November, revenue increased by 0.5 percent. Personal expenditure declined 0.6 percent for the month, in line with expectations. This was the first decrease since February 2021, and it followed a 0.4 percent increase in expenditure in November.

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8:30 A.M. ET: Personal Consumption Expenditures increased 5.8 percent in December, the largest increase since 1982

In December, a key inflation gauge reached a new four-decade high, highlighting the economy’s continuing inflationary pressures. As per the Bureau of Economic Analysis, the Personal Consumption Expenditures (PCE) index increased 5.8 percent in December compared to the same month the previous year.

This increased from November’s 5.7 percent year-over-year increase. According to Bloomberg statistics, the print for the last month of 2021 met consensus predictions. PCE climbed 0.4 percent month over month in December, matching expectations and decreasing from November’s 0.6 percent growth.

However, excluding food and energy costs, the core PCE climbed somewhat more than predicted, rising 4.9 percent year on year vs. the 4.8 percent increase projected by experts. This followed a 4.7 percent increase in core PCE in November. The Federal Reserve’s favored gauge of underlying price movements is core PCE.

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