The gains came mostly in the final hour of trading, which has turned into a new witching hour on the Street and came as investors parsed fresh U.S. economic data and upbeat earnings from Apple as promising.
Reports showed U.S. consumer spending falling 0.6% in December, amid a wave of COVID-19 cases from the highly contagious omicron variant of coronavirus.
Meanwhile, a measure of U.S. inflation preferred by the Federal Reserve climbed 5.8% in 2021 after another increase in December. Employment costs rose 1% in the fourth quarter. Separately, a reading of consumer sentiment slumped to a 10-year low as inflation concerns mount, underscoring the waning appetite for assets perceived as risky.
“The slowdown in consumer spending during December saw personal spending levels decline sharply by 0.6%, while the latest Michigan sentiment numbers showed US consumers were more worried about inflation than at any time in the last 10 years,” wrote Michael Hewson, chief market analyst at CMC Markets UK, in a daily note.
A volatile month has whipsawed investors, who have juggled worries over the pace of Federal Reserve interest rate increases, a mixed earnings reporting season, the continuing pandemic fallout and geopolitical worries surrounding a potential Russia invasion of Ukraine.
Questions over the Fed’s plans to tackle inflation have hit interest rate-sensitive technology and growth stocks particularly hard. This week’s Fed meeting produced no change in interest rates, but Chairman Jerome Powell didn’t rule out a potential rate increase at each meeting this year, and said the central bank needed to be “nimble.”
Positive news came from Apple AAPL, whose shares were up nearly 7% after the iPhone maker sailed past Wall Street’s earnings expectations for the holiday quarter, and executives forecast continued revenue growth in the current quarter. Earnings topped $30 billion for the first time, and the results mark a high point in a thus-far mixed reporting season.
“Apple’s blowout results are just what the tech sector needed to get out of its recent funk. The iPhone giant’s big beat could be the next catalyst to spark a rally in the tech space,” said Jesse Cohen, senior analyst at Investing.com, in a note to clients.
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On top of that, shares of Robinhood Markets HOOD, which had been down double-digits in premarket trading swung higher, after the trading app closely associated with the “meme stocks” phenomenon produced a bigger-than-expected quarterly loss and reported a drop securities-trading volumes.
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On the geopolitical front, Russia’s foreign minister Sergei Lavrov said Friday that Moscow doesn’t intend to start a war, but also “would not let our interests be rudely trampled on and ignored.”
A day earlier saw U.S. President Joe Biden warning Ukraine’s president of a “distinct possibility” of Russian military action against its neighbor in February.
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