Investors were hopeful that the Federal Reserve may indicate a slowdown in interest rate increases next week, as stocks rallied for a second consecutive week. The S&P 500 rose by 2.5% during Friday’s trading, adding to a 3.95% weekly gain, despite the index being down over 18% since the beginning of the year due to concerns of a recession and interest rate increases.
Investors monitored company earnings reports this week, particularly from major tech companies such as Microsoft, Apple, Alphabet, and Meta. While earnings results were largely disappointing, investors focused on Apple’s better-than-expected earnings, with record sales in the third quarter, boosting shares by 7.6%. Conversely, Amazon’s shares fell by 6.8% after the company warned of weak growth and lower-than-expected sales estimates for the end of the year.
Looking ahead, investors will be watching the Fed’s announcement on Wednesday regarding its efforts to tackle inflation, with expectations for three-quarters of a percentage point interest rate increase. While Wall Street appears certain of the increase, investors are questioning whether the Fed will begin to slow its increases.
Despite recent gains, hopes have been dashed before by the Fed, causing some caution among investors. On Friday, treasury yields rose, with the 10-year note increasing to 4.01% and the two-year note moving up to 4.41%. In other markets, the Stoxx 600 rose 0.1%, the FTSE 100 closed with losses of 0.4%, Hong Kong’s Hang Seng fell by 3.7%, and Tokyo’s Nikkei 225 lost 0.9%.
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