Wall Street is rallying on hopes of a less aggressive Fed

  • Some Fed officials show desire to slow rate hikes – WSJ
  • Twitter, meta drop after Snap’s ad warning
  • AmEx, Verizon Communications fall after gains
  • Dow up 2.13%, S&P 500 up 2.03%, Nasdaq up 1.87%

NEW YORK, Oct 21 (Reuters) – US stocks rose on Friday after a report said the Federal Reserve is likely to debate a smaller rate hike in December, raising hopes the central bank may be ready to do one adopt a less aggressive monetary policy stance.

Some Fed officials have begun to gauge their desire to slow the pace of hikes soon, according to the Wall Street Journaland how to signal plans to approve a smaller increase in December.

San Francisco Federal Reserve Chair Mary Daly echoed this sentiment, saying it is time to talk about slowing the rise in the cost of borrowing and that this should avoid sending the economy into a “lockdown” by raising interest rates too much. unforced downturn”.

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“It has an outsized impact because it’s so concerned right now that the market will latch on to every headline it sees, positive or negative, and then it’s going to react that way,” said Ken Polcari, managing partner at Kace Capital Advisor in Boca Raton, Fla.

Daly’s statement about the possible slowdown will be interpreted as a positive headline, allowing the market to take off, he added.

Analysts are broadly expecting the Fed to hike rates by 75 basis points for a fourth straight meeting in November. Equities have been under pressure this year as the central bank embarked on an aggressive rate-hiking path to control stubbornly high inflation, raising concerns of a policy mistake that will push the economy into recession.

The Dow Jones Industrial Average (.DJI) up 646.73 points, or 2.13%, to 30,980.32, the S&P 500 (.SPX) rose 74.27 points, or 2.03%, to 3,740.05 and the Nasdaq Composite (.IXIC) added 198.82 points, or 1.87%, to 10,813.66.

Each of the three major indices was on course for its biggest weekly percentage gains in four months.

The news helped shares recover from early losses as Snap Inc (SNAP.N) plunged 30.07% after posting the slowest quarterly revenue growth in five years as advertisers cut spending due to inflation and geopolitical concerns.

That weighed on other companies that rely heavily on advertising revenue, like Meta Platforms Inc (META.O)down 1.22%, and Pinterest (PINS.N)Discount of 7.42%.

American Express also fell after reporting quarterly earnings (AXP.N)which fell 2.88% and Verizon Communications (VZ.N)down 4.58%

American Express said it had built larger reserves to prepare for possible outages if an economic downturn looms, while Verizon’s profit fell 23% and the airline missed estimates for mobile subscriber growth.

Next week will bring revenue from names like Twitter (TWTR.N)microsoft corp (MSFT.O)alphabet (GOOGL.O) and Apple Inc (AAPL.O).

Despite the recent string of disappointing results, the third-quarter earnings season has so far been better than feared, with growth expectations for S&P 500 companies up 3.1%, according to Refinitiv data, up from 2.8% earlier in the week, but still significant below the 11.1% forecast in early July.

Schlumberger (SLB.N) rocketed 10.51%, which helped lift the energy sector of the S&P 500 (.SPNY) 2.71% after reporting a better-than-expected quarterly profit.

Rising issues predominated on the NYSE at a 2.37 to 1 ratio; on the Nasdaq, a 1.84 to 1 ratio favored movers.

The S&P 500 posted 8 new 52-week highs and 32 new lows; the Nasdaq Composite posted 36 new highs and 285 new lows.

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Reporting by Shreyashi Sanyal and Ankika Biswas in Bengaluru; Additional reporting by Bansari Mayur Kamdar; Edited by Anil D’Silva, Arun Koyyur, Shounak Dasgupta and Aurora Ellis

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