Wall Street rallies on hopes of lower Fed rate hike

Oct 21 (Reuters) – The S&P 500 and Dow Jones rose on Friday after a report said the U.S. Federal Reserve would likely debate signaling plans for a lower interest rate hike in December, while declines in social media companies capped gains on the Nasdaq.

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

“I would say the Fed is now looking at easing the magnitude or slowing down its rate hikes, which underscores its price stability campaign,” said Joe Brusuelas, chief economist at RSM, a US-based advisory firm. United States.

Equity markets were hammered by fears of an aggressive rate hike cycle that would tip the US economy into a recession, with the benchmark 10-year US Treasury yield hitting new 15-year highs earlier in the year. session.

Traders are still widely expecting a fourth 75 basis point hike at the central bank’s November meeting. FEDWATCH

The report helped markets recoup early session declines when Snap inc. (SNAP.N) fell 30.86% after posting its weakest quarterly revenue growth in five years as advertisers cut spending due to inflation and geopolitical difficulties.

Other companies that rely heavily on ad revenue such as Alphabet Inc (GOOGL.O) and Meta Platforms Inc. (META.O) fell 0.20% and 2.52%, respectively, pushing the S&P 500 communications services sector index (.SPLRCL) decrease of 0.55%.

“It’s not uncommon for companies to cut ad spending during an economic downturn,” 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 that’s probably going to transfer over to Alphabet.”

At 12:00 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 444.56 points, or 1.47%, at 30,778.15, the S&P 500 (.SPX) was up 46.56 points, or 1.27%, at 3,712.34.

The Nasdaq Composite (.IXIC) was up 110.56 points, or 1.04%, at 10,725.41.

The third quarter reporting season has been better than expected so far, prompting analysts to raise earnings expectations for S&P 500 companies to an increase of 3.1% from 2.8% earlier in the week. , according to data from Refinitiv.

It remains well below the 11.1% increase that was expected in early July.

After earnings-driven gains earlier this week, the S&P 500 and Nasdaq are set for their best week in six, while the Dow is eyeing its biggest weekly gain since late June.

Verizon Communications Inc lost 5.27% as its profit fell 23% and the operator missed estimates for wireless subscriber additions.

American Express (AXP.N) fell 5.66% after building larger provisions to prepare for potential defaults as economic downturn looms.

Schlumberger (SLB.N) rose 9.2%, pulling the S&P 500 energy sector up 2.2%, after posting a quarterly profit above expectations.

Advancing issues outnumbered decliners for a 1.62-to-1 ratio on the NYSE and a 1.39-to-1 ratio on the Nasdaq.

The S&P index recorded seven new 52-week highs and 32 new lows, while the Nasdaq recorded 25 new highs and 252 new lows.

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

Our standards: The Thomson Reuters Trust Principles.