Stocks rally 1/2022

The S&P 500 rose 2.4 percent, its biggest one-day jump since June 2020. But some analysts cautioned against reading too much into a single day’s bounce.

The S&P 500 rose 2.4 percent, its biggest one-day jump since June 2020, while the technology-heavy Nasdaq composite rose 3.1 percent. Friday’s gain snapped a three-day streak of losses and left the S&P 500 up 0.8 percent for the week, its first weekly gain this year.

The rally came relatively late in the day and was a remarkable shift in tone after stocks had fallen in early trading and struggled to hold onto gains in the afternoon. Stocks zigzagged between gains and losses every day this week as investors tried to assess how quickly the Federal Reserve is likely to raise interest rates to combat inflation.

According to Bespoke, the S&P 500 has had an intraday range of at least 2.25% every day in the past week. The major averages ended Friday higher, wiping out the week’s losses, after pulling off another late day reversal.

For the week, the Dow was up 1.3%, the first positive week in four. The S&P 500 edged up 0.8% to 4,431 to end the week, and the Nasdaq Composite was flat.

The S&P was 8% off its all-time high as of Friday’s close, and is down 7% for the month of January. The Nasdaq is 15% off its high, and is down 12% for the month.

Why the market has been rock

77% of companies are beating estimates now for the fourth quarter, and they are reporting earnings 4% above expectations, according to Refinitiv. That is well below the 16% average of the last four quarters but in line with the long-term average

Some data released on Friday was seen positively. The Employment Cost Index, a measure of wages and salaries in the United States that is closely watched by the Fed, rose 1 percent in the three months ending in December compared with the prior quarter, the government said. That was a slowdown from the previous three months and lower than the rate economists had expected, factors that might take pressure off the Fed, some analysts said.

The yield on 10-year Treasury notes, a proxy for investor expectations about rates, dipped slightly.

Apple also gave markets a big lift after reporting a record profit of $34.6 billion in the last three months of 2021 on Thursday. Tim Cook, Apple’s chief executive, said he expected supply chain constraints in the current quarter to be less of a problem than they were during the holidays.

Apple’s better-than-expected quarter could ease fears that the tech industry’s long period of fast growth may be coming to an end, and shares of some other big technology companies — which led the stock market sell-off this month — also climbed. Alphabet rose 3.4 percent, while Meta rose 2.4 percent, and Amazon climbed 3.1 percent.

The tech giants are so large that gains in their shares can help pull the broad benchmarks higher.

The S&P 500 is still down 7 percent for January, its worst monthly showing since the since the coronavirus pandemic stalled the world’s economies.