U.S. Stocks Rally To Finish Extremely Volatile Week On Upbeat Note

(RTTNews) - Continuing the rollercoaster ride seen throughout the week, stocks showed a significant turnaround over the course of the trading session on Friday. The major averages came under pressure to start the day but rebounded strongly to end the day sharply higher.

The major averages all posted strong gains for the day, with the tech-heavy Nasdaq leading the rally. While the Nasdaq spiked 417.79 points or 3.1 percent to 13,770.57, the S&P 500 surged 105.34 points or 2.4 percent to 4,431.85 and the Dow jumped 564.69 points or 1.7 percent to 34,725.47.

With the rally on the day, the major averages managed to close higher for the extremely volatile week. For the week, the Dow advanced by 1.3 percent, the S&P 500 climbed by 0.8 percent and the Nasdaq inched up less than 0.1 percent.

The substantial rebound seen over the course of the trading day may partly have reflected bargain hunting, with the Nasdaq and the S&P 500 bouncing off multi-month closing lows.

Tech giant Apple (AAPL) helped to lead the way back to the upside, spiking by 7 percent after reporting better than expected quarterly results.

Credit card giant Visa (V) also moved sharply higher after reporting fiscal first quarter results that exceeded analyst estimates on the top and bottom lines.

On the other hand, shares of Chevron (CVX) came under pressure after the energy giant reported fourth quarter earnings that missed analyst estimates.

Fellow Dow component Caterpillar (CAT) also moved notably lower as supply chain concerns overshadow the construction equipment maker's better than expected quarterly results.

Traders were also digesting a report from the Commerce Department showing core consumer price growth accelerated to a nearly 40-year high in December.

The Commerce Department's reading on inflation, which is said to be preferred by the Federal Reserve, showed the annual rate of core consumer price growth accelerated to 4.9 percent in December, reaching the highest level since September 1983.

At the same time, the report also showed personal spending fell by 0.6 percent in December after rising by 0.4 percent in November. The decrease in spending matched economist estimates.

Excluding price changes, real personal spending tumbled by 1.0 percent in December after slipping by 0.2 percent in the previous month.

"Even assuming a bounce-back for each of the three months of the first quarter, which seems unlikely given that Omicron and the child tax credit expiry will weigh on spending in January, the devastatingly weak end to the previous quarter means that we expect first-quarter real consumption growth to be unchanged overall," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

"Add in a slower pace of inventory accumulation, and we currently have first-quarter GDP growth tracking at -0.5% annualized," he added. "To our minds, despite the strength of price and wage inflation, it is disappointingly weak real economic growth that will prevent the Fed from delivering a full-blown Ratemaggedon this year."

Sector News

Software stocks moved sharply higher over the course of the session, driving the Dow Jones U.S. Software Index up by 3.5 percent.

Substantial strength also emerged among biotechnology stocks, as reflected by the 3.3 percent spike by the NYSE Arca Biotechnology Index. The index rebounded after ending the previous session at its lowest closing level in well over a year.

Commercial real estate stocks also turned in a strong performance on the day, resulting in a 3.2 percent surge by the Dow Jones U.S. Real Estate Index.

Telecom, housing, retail and healthcare stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index spiked by 2.1 percent, while China's Shanghai Composite Index slumped by 1 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index slid by 0.8 percent, the U.K.'s FTSE 100 Index and the German DAX Index tumbled by 1.2 percent and 1.3 percent, respectively.

In the bond market, treasuries moved higher over the course of the session after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.5 basis points at 1.782 percent.

Looking Ahead

The Labor Department's monthly jobs report is likely to be in focus next week, although traders are also likely to keep an eye on reports on manufacturing and service sector activity.

Earnings news will also continue to attract attention, with a slew of big-name companies scheduled to report their quarterly results.