Wall Street Rebounds with Boost from Megacap Stocks

Wall Street’s main indexes experienced a reversal in direction on Friday, as major growth stocks provided a boost to the market. The S&P 500 is now on track for its first weekly gain in five weeks, while the Dow is still expected to decline for the third consecutive week.

The positive momentum was driven by megacap stocks such as Microsoft, Meta Platforms, Alphabet, and Nvidia, which all saw a rise of about 2%. This surge helped offset concerns about slowing wage growth, as indicated by the latest jobs report. While U.S. employment showed strong growth in September, wage growth has been slowing down.

The Federal Reserve is closely monitoring these developments, and the steady deceleration of wage growth is seen as a positive sign. It provides reassurance to Fed officials that despite above-trend job growth, there is no significant upward pressure on wages.

Financial markets and most economists believe that the recent surge in long-term U.S. Treasury yields has likely put an end to interest rate hikes by the Fed. Traders are currently estimating a 73% chance of interest rates remaining unchanged in November and a 58% chance in December.

Information technology shares emerged as the top gainers among the major S&P 500 sectors, while consumer staples stocks faced some downward pressure. Energy stocks are expected to be the hardest hit sector for the week, while communications services and information technology are likely to be the top performers.

Looking ahead, investors will be closely watching upcoming data releases, including consumer price inflation and producer price index readings for September. The Fed will also be monitoring these figures, as they will provide insights into the overall health of the economy.

Additionally, the upcoming quarterly earnings season will be in focus, with major banks like JPMorgan Chase, Wells Fargo, Citigroup, and asset manager BlackRock set to report next week. These earnings reports will provide further insights into the financial health of these institutions and the overall market sentiment.

In midday trading, the Dow Jones Industrial Average was up 0.87%, the S&P 500 rose 0.95%, and the Nasdaq Composite gained 1.23%. Notable stock movements included a 1% decline in Tesla shares following a price cut on its Model 3 and Model Y vehicles, and a 1.7% drop in Exxon Mobil shares amid reports of advanced talks to acquire Pioneer Natural Resources, which saw its stock surge by 10.8%. On the positive side, Eli Lilly shares rose 3.1% after BofA Global Research raised its price target on the drugmaker’s stock to $700.

Overall, the market rebound and the strong performance of megacap stocks have provided some optimism for investors. As the focus shifts to upcoming data releases and earnings reports, market participants will be closely monitoring these developments to gauge the future direction of the economy and the financial markets.