Wall Street closed with gains and capped a positive week hand in hand with the drop in inflation in the United States

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The New York Stock Exchange hit levels of September last year

Wall Street closed with gains and capped a positive week with the US inflation drops

Workers at the New York Stock Exchange (REUTERS/Andrew Kelly)

Stocks closed higher on Wall Street, marking the market's third winning week in the last four. The S&P 500 rose 0.2% on Friday, after giving back much of its afternoon gain. The Nasdaq Composite Index rose 0.9% and the Dow Jones Index rose 0.1%.

Next week could be even busier for the markets. The Federal Reserve is expected to announce its latest interest rate hike. A report released on Friday showed that inflation continues to cool, raising hopes of a smaller and less painful rise.

Leading the rise was American Express , which rose 11.3% despite lower-than-expected earnings and revenue last quarter. Its earnings forecast through 2023 beat Wall Street expectations and it announced an expected increase in its dividend.

Another big rise for Tesla's stock it also supported the market. It rose 12.1% following its stronger-than-expected late-2022 earnings report released earlier in the week.

Wall Street closed with gains and capped a positive week thanks to the drop in inflation in the United States

Traders work on the New York Stock Exchange (REUTERS/Andrew Kelly)

These gains helped offset heavy losses for Intel after the chipmaker's dire warning. Not only did its revenue and profit miss expectations last quarter amid a punishing slowdown in sales, but it also gave a revenue forecast for this quarter that was more than $2 billion below expectations. of the analysts. Intel fell 6.8%.

Hasbro slid 7.5% after saying its performance last holiday shopping season was “lower than expected” and that it will likely post a 17% drop in fourth-quarter revenue. The company will cut some 1,000 jobs to cut costs.

So far, the job market it has remained remarkably resilient despite the slowdown in the broader economy. Nearly all of the biggest layoffs have been in the tech sector, which rushed to expand after the pandemic skyrocketed demand for technology. But the layoffs may be starting to spill over into other sectors.

Earnings season is getting into full swing, and companies have been delivering results and disparate forecasts. This has helped cause large swings in the markets.

Lately, two big competing ideas have sent Wall Street up, down, and back up again. On the one hand, concern about a sharp drop in profits and a serious recession in the economy after all the interest rate hikes applied by the Reserve Federal last year to squash inflation. On the other hand, the hope that the cooling off of inflation will allow the Federal Reserve to lower rates.

Wall Street closed with gains and capped off a positive week thanks to the drop in inflation in the United States

FILE PHOTO: The Wall Street entrance to the New York Stock Exchange (REUTERS/Brendan McDermid)

The market is partly trying to reconcile that weak earnings and falling demand may be necessary for inflation to cool further, said Keith Buchanan, a portfolio manager at Globalt Investments. “It's like this is the medicine the economy needs to take,” he said.

Friday's economic reports supported recent data suggesting inflation continues to moderate. The Federal Reserve's preferred measure, which excludes food and energy costs, was 4.4% higher in December than the previous year. This figure, down from 4.7% in November, is in line with economists' expectations.

More broadly, inflation slowed to 5% in December, from 5 .5% for November, according to the Personal Consumption Expenditures Price Index.

The reports also showed that American income growth slowed in December, while consumer spending fell slightly more than expected.

According to another report, US consumers are also lowering their inflation expectations for the coming year. In the long term, according to the University of Michigan, consumer inflation expectations remain more or less at the level of the last 18 months.

Keeping those expectations anchored is key to the Federal Reserve, which wants to avoid a vicious circle in which households expecting high inflation make moves that only make it worse.

Economists say Friday's data will likely keep the Federal Reserve on track to raise its rate reference by 0.25 percentage points at their meeting next week. This would be a step back from last month's 0.50 point rise and the previous four consecutive 0.75 point rises.

Smaller increases would put less added pressure on the economy, which has already suffered damage in the housing sector and other areas due to last year's rate hike.

The yield on the 10-year Treasury note, which sets rates for mortgages and other major loans, rose to 3.52% from 3.51% on Thursday. The two-year yield, which moves more in line with expectations for Federal Reserve stock, rose to 4.21% from 4.19%.

Next week could be a busy one for markets, with several high-profile events in addition to the Federal Reserve announcement. The European Central Bank will release its latest decision on rates, the US government will publish its latest monthly labor market report and more than 100 S&P 500 companies will present their quarterly results.

In foreign stock markets, the Indian sensex fell 1.5% as the Adani group was hit again by strong selling. Shares of seven Adani companies have plunged this week, wiping out billions of dollars in market value, after short-selling firm Hindenburg Research said it was betting against the conglomerate, which has interests in energy, transmission data, construction and other major industries.

(With reporting from AP)

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