Oil prices fell and the Federal Reserve offered investors clarity on its plan to tame inflation, triggering a rally that pushed stocks to their best week in more than a year.
The S&P 500 rose 1.2% on Friday, its fourth straight day of gains, taking its rise for the week to 6.2%. It was the index’s biggest one-week gain since November 2020, and followed months of volatility that saw major indexes fall sharply during the year as investors reacted to a bad economic turn. after another. This week’s gains mean the S&P 500 has halved its losses for the year, to around 6.4%.
Tech stocks, which have been hit particularly hard by concerns that rising interest rates would make riskier investments less attractive, rallied. Apple, the largest stock in the S&P 500, gained 6% over the week. The tech-heavy Nasdaq Composite Index, which had fallen for four straight weeks, ended the week up 8.2%.
“Too many strong tech stocks have been oversold, and in the near term, it seems unlikely that Wall Street will experience a significant slowdown now that commodity prices are no longer soaring,” said Edward Moya, senior market analyst. at OANDA, a currency exchange and brokerage firm.
This volatility is most likely far from over, analysts warned. But some of the pressures that had combined to undermine once-booming markets appeared to be easing.
The biggest daily gain came on Wednesday, after the Fed finally raised its key rate by a quarter of a percentage point. It was the central bank’s first decisive move to rein in inflation, which has been rising at the fastest pace in 40 years. Markets had been trying to time the Fed’s moves for months as policymakers headed for a rate hike, with some investors and analysts worried the central bank could act too quickly, reversing the economy’s recovery.
Policy Makers planned six more similar-sized moves this year, in line with what investors had expected, and central bank chairman Jerome H. Powell reassured investors on Wednesday that the economy was strong enough to withstand rising rates. higher.
Crude rose on Friday but ended the week lower, with Brent around $108 a barrel. That was well below its highs from earlier in the month, when it approached $140 a barrel.
Fresh lockdowns in China after a coronavirus outbreak have helped ease worries about an energy crisis as Russian oil, which produces around 10% of the world’s supply, has effectively been put on a no-buy list. It also helped Russia and Ukraine hold ceasefire talks for much of the week, even as the conflict between them escalated and Russia widened its offensive in the country.
Coral Murphy Marcos contributed report.