Indices Jump on Inflation Data; Nasdaq is having its best quarter since 2020

  • February PCE growth slows
  • S&P 500 gains in second quarter
  • For the day, the Dow gained 1.3%, the S&P 500 gained 1.4%, and the Nasdaq gained 1.7%.

NEW YORK, March 31 (Reuters) – Wall Street rallied more than 1% on Friday and the Nasdaq posted its biggest quarterly percentage gain since June 2020, as signs of cooling inflation prompted the Federal Reserve to end its aggressive interest rate hikes soon.

The S&P 500 closed at its highest level since Feb. 15 and posted a second-quarter gain thanks to a 21.5% gain in the technology sector ( .SPLRCT ) in the first quarter.

The quarterly gains came despite a sharp selloff in bank stocks following the collapse of two regional banks earlier this month and concerns about a larger financial crisis.

The S&P 500 Financials (.SPSY) was the worst-performing sector for the quarter, posting a 6.1% decline, while the KBW Regional Bank Index (.KRX) fell 18.6%.

U.S. consumer spending rose modestly in February as inflation cooled, a Commerce Department report showed Friday.

“The stock market seems to be happy to see a tick down in inflation. It underscores that the Fed’s campaign, albeit slow indeed, is working,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte. , North Carolina.

The central bank has been raising rates to reduce inflation. Expectations for a 25 basis point rate hike fell to about 50% at its May meeting, with no hike likely.

The Dow Jones Industrial Average (.DJI) rose 415.12 points, or 1.26%, to 33,274.15, the S&P 500 (.SPX) added 58.48 points, or 1.44%, to 4,109.31 and the Nasdaq (.IX) added 40.40 points, or 1.44%, to 4,109.31. 40,000) points, also rose to 33,274.15. 1.74%, 12,221.91.

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During the week and month, stocks posted strong gains. The Nasdaq rose 6.7% in March.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City on March 30, 2023. REUTERS/Brendan McDermid

In the quarter to the three months ended June 2020, the Nasdaq rose 16.8%, its largest quarterly percentage increase. Based on the latest data, the S&P 500 rose 7% in the quarter and the Dow rose 0.4%.

Reuters Graphics Reuters Graphics

Semiconductors were among the quarter’s strongest performers, with the Philadelphia Semiconductor Index (.SOX) up 27.6%.

Shares of tech giants gained as investors fled banks and U.S. Treasury yields fell, with two-year note yields posting their biggest monthly drop since 2008 on Friday. Higher yields can be negative for large tech companies.

Shares of Apple Inc ( AAPL.O ) rose 1.6% on Friday, along with other megacaps. It also won its appeal against a decision by Britain’s antitrust regulator to launch an investigation into its mobile browser and cloud gaming services.

On Friday, Boston Fed President Susan Collins said that regardless of where the U.S. central bank stops with rate hikes, maintaining that level for a while would help push inflation back to the 2% target.

Volume on US exchanges was 11.98 billion shares, compared to the full session average of 12.74 billion over the past 20 trading days.

Advancing issues outnumbered decliners on the NYSE by a 4.78-to-1 ratio; On the Nasdaq, a 2.45-to-1 ratio favored the advancers.

The S&P 500 posted 19 new 52-week highs and no new lows; The Nasdaq Composite posted 81 new highs and 131 new lows.

Reporting by Carolyn Valetkevich; Additional reporting by Amruta Khandekar and Angika Biswas; Additional reporting by Johan M Cherian Editing by Vinay Dwivedi, Maju Samuel and Richard Chang

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