U.S. Stocks Finish Volatile Session Mostly Higher

Stocks saw considerable volatility over the course of the trading session on Friday but managed to close mostly higher. The tech-heavy Nasdaq showed a strong move to the upside, ending the session at its best closing level in over four months.

The major averages pulled back well off their highs going into the close. While the Nasdaq jumped 109.30 points or 1.0 percent to 11,621.71, the S&P 500 rose 10.13 points or 0.3 percent to 4,070.56 and the Dow inched up 28.67 points or 0.1 percent to 33,978.08.

For the week, the Nasdaq soared by 4.3 percent, the S&P 500 surged by 2.5 percent and the Dow show up by 1.8 percent.

The choppy trading on Wall Street came as traders looked ahead to the Federal Reserve’s highly anticipated monetary policy meeting next week.

With the Fed widely expected to slow the pace of interest rate hikes to 25 basis points, traders will pay close attention to the accompanying statement for clues about the outlook for further rate hikes.

Recent upbeat economic data has generated some optimism the Fed could engineer a soft landing but has also led to concerns the central bank will need to keep rates at elevated levels for longer than anticipated.

On the U.S. economic front, the Commerce Department released a report showing personal income increased in line with economist estimates in the month of December.

The report said personal income inched up by 0.2 percent in December after rising by a downwardly revised 0.3 percent in November.

Economists had expected personal spending to edge up by 0.2 percent compared to the 0.4 percent increase originally reported for the previous month.

Meanwhile, the Commerce Department said personal spending dipped by 0.2 percent in December after slipping by 0.1 percent in November. The modest decrease matched economist estimates.

The report also said core consumer prices, which exclude food and energy prices, rose by 0.3 percent in December after inching up by 0.2 percent in November.

The inflation reading, which is said to be preferred by the Fed, was expected to show another 0.2 percent uptick.

The Commerce Department said the annual rate of growth in core consumer prices slowed to 4.4 percent in December from 4.7 percent in November.

“With higher interest rates evidently weighing heavily on demand now, we expect core inflation to continue moderating this year, which will eventually persuade the Fed to begin cutting interest rates late this year,” said Paul Ashworth, Chief North America Economist at Capital Economics.

A separate report from the National Association of Realtors showed an unexpected rebound in pending home sales in December, while the University of Michigan upwardly revised its reading on consumer sentiment in January.

The jump by the tech-heavy Nasdaq came despite a sharp decline by shares of Intel (INTC), with the semiconductor giant plunging by 6.4 percent.

The steep drop by Intel comes after the company reported weaker than expected fourth quarter results and forecast a loss for the current quarter.

Energy giant Chevron (CVX) also gave back ground after Thursday’s surge after reporting fourth quarter earnings that missed analyst estimates.

Meanwhile, shares of American Express (AXP) soared by 10.5 percent after the credit card giant reported weaker than expected fourth quarter results but provided upbeat guidance for 2023 and increased its dividend.

Sector News

Transportation stocks showed a strong move to the upside on the day, driving the Dow Jones Transportation Average up by 1.3 percent.

Notable strength was also visible among retail stocks, as reflected by the 1.2 percent gain posted by the Dow Jones U.S. Retail Index. The index reached its best closing level in three months.

On the other hand, oil stocks saw considerable weakness, resulting in a 1.8 percent slump by the NYSE Arca Oil Index. The pullback by the index came after it ended Thursday’s trading at a record closing high.

The weakness among oil stocks came amid a steep drop by the price of crude oil, with crude for crude for March delivery tumbling $1.33 to $79.68 a barrel.

Gold stocks also showed a significant move to the downside, dragging the NYSE Arca Gold Bugs Index down by 1.6 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index inched up by 0.1 percent, while Hong Kong’s Hang Seng Index rose by 0.5 percent.

The major European markets also showed modest moves to the upside on the day. While the French CAC 40 Index closed just above the unchanged line, the U.K.’s FTSE 100 Index and the German DAX Index both inch up by 0.1 percent.

In the bond market, treasuries moved lower as traders looked ahead to next week’s Fed meeting. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.9 basis points at 3.522 percent.

Looking Ahead

The Fed decision is likely to be in the spotlight next week, although traders are also likely to keep an eye on the monthly jobs report as well as reports on consumer confidence and manufacturing and service sector activity.

Earnings news is also likely to continue to attract attention, with a slew of well-known companies due to report their quarterly results.

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