The Dow soared more than 500 points on Friday after a report said the Federal Reserve will likely debate on signaling plans for a smaller interest rate hike in December, while declines in social media firms capped gains on the Nasdaq.
In afternoon trading, the Dow Jones Industrial Average was up 534 points, or 1.9%, at 30,872, while the S&P 500 was up 1.6%.
The Nasdaq climbed 1.3%.
Some Fed officials have begun sounding out their desire to slow down the pace of increases soon, according to the Wall Street Journal, and how to signal plans to approve a smaller increase in December.
“I would say that the Fed now is looking at easing up on the magnitude or slowing its rate hikes, which underscores its price stability campaign,” said Joe Brusuelas, chief economist at RSM, a US-based consulting firm.
Stock markets have been hammered by worries of aggressive rate-hiking cycle tipping the US economy into a recession, with the benchmark 10-year US Treasury yield hitting fresh 15-year highs earlier in the session.
Traders are still widely expecting a fourth 75-basis-point hike at the central bank’s November meeting.
The report helped markets recoup declines from earlier in the session when Snap plummeted 30.86% after posting its slowest quarterly revenue growth in five years as advertisers cut spending due to inflation and geopolitical woes.
Other companies that rely heavily on ad revenue such as Alphabet and Meta Platforms fell 0.2% and 2.52%, respectively.
“It’s not uncommon for companies to cut back on advertising spending during concerns of an economic slowdown,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
“Right now you don’t want to be in a Snap or a Meta, and it’s probably going to transfer over to Alphabet.”
The third-quarter reporting season so far has been better-than-feared, prompting analysts to raise earnings expectations for S&P 500 companies to a 3.1% increase from 2.8% earlier in the week, according to Refinitiv data.
It is still well below the 11.1% rise that was forecast at the start of July.
Following the earnings-driven gains from earlier this week, the S&P 500 and the Nasdaq are set for their best week in six, while the Dow eyed its biggest weekly gain since late June.
[Written in collaboration with other media outlets with information from the following sources]
