US stocks rose on Friday as investors neared the end of a turbulent trading week marked by mixed retail earnings and a chorus of hawkish speeches from the Fed.
The S&P 500 (^GSPC) rose 0.4%, while the Dow Jones Industrial Average (^DJI) added 180 points, or 0.6%. The technology-heavy Nasdaq Composite (^IXIC) lagged behind, bobbing around flatline. Treasury yields continued their rise, with the benchmark 10-year note above 3.8% and the rate-sensitive 2-year yield inching towards 4.5%.
A meeting of Fed officials on Thursday dismissed speculation that a tightening pause is near. The comments made at separate conferences across the country sent equities and bonds into chaos after a fleeting uptrend buoyed by lighter inflation data.
Inflation has shown signs of moderating only recently, with consumer and producer price data still stubbornly high despite receding in October. Meanwhile, US retail sales rose at the fastest pace in eight months during the same period, prompting policymakers to clamp down on tough messaging about work that still needs to be done to cut skyrocketing costs.
Federal Reserve Bank of Minneapolis President Neel Kashkari told a Minnesota Chamber of Commerce webcast event that the extent to which policymakers expect to raise their key federal funds rate remains an “open question.” . His comments came after St. Louis Fed President James Bullard and San Francisco Fed President Mary Daly each said the central bank is seeking a terminal rate of up to 5.25%.
“Fed Chair Powell recalibrated monetary policy at the November FOMC meeting by adopting a new ‘velocity versus target’ paradigm, signaling intent to reach a higher terminal fed funds rate while it does so at a slower pace,” said EY Parthenon chief economist Gregory Daco. he said in a note. “The difficulty for the Fed will be to avoid excessive and counterproductive easing of financial conditions in the face of weaker-than-expected inflation.”
Goldman Sachs Group also on Thursday raised its forecast for the Federal Reserve’s terminal rate to a range of 5% to 5.25%, adding another 25 basis point increase in May after increases of that size in February and March, and a half point. percentage in December.
“Inflation is likely to remain uncomfortably high for a while, and this could put pressure on the FOMC to make a longer series of small increases next year,” the economists led by Jan Hatzius also said.
In the shadow of renewed rate jitters, Gap (GPS), Ross Stores (ROST) and Williams-Sonoma (WSM) rounded out a busy week of retail gains.
Gap shares rose 4% on Friday after the company disclosed results that beat Wall Street estimates. However, Chief Financial Officer Katrina O’Connell stressed that the macroeconomic environment remains challenging, but that Gap will take a “prudent approach to consumer uncertainty.”
Ross Stores shares rose as much as 18%, the most in two years, after the retailer beat earnings forecasts and raised its fourth-quarter guidance, citing boosting sales and improving assortments. For the parties.
Meanwhile, shares of home furnishings store Williams Sonoma plunged nearly 6% after it withdrew its guidance through 2024 due to “macro uncertainty.”
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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