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US shares as well as oil prices reaped gains after fresh inflation data piqued investors’ hopes that price rises may be nearing a peak.
The S&P 500 advanced 0.5% Friday. The index retreated Thursday but was on track for its strongest week of gains since February. The tech-focused Nasdaq Composite Index was up 0.3%, while the Dow Jones Industrial Average was up 55 points, or 0.2%.
The stock market edged higher in choppy trading on Friday after data showed consumer prices rose, taking some pressure off investors concerned about the Federal Reserve’s aggressive tightening of its monetary policy.
The Labor Department’s report showed U.S. consumer prices accelerated 6.8% in the 12 months through November, their highest level since 1982, as the cost of goods and services rose broadly amid supply constraints.
Friday’s rise in U.S. inflation was broadly expected but it does confirm that price pressures continue to build but also broaden out.
Seven of the 11 major S&P sectors advanced, with defensive consumer stapes (.SPLRCS), real estate (.SPLRCR) and utilities (.SPLRCU) largely outperforming, suggesting cautionary trading ahead of the Fed’s policy meeting next week.
Investors tend to take more a defensive approach in search of a bit of a safe haven until they find out next Wednesday what the Fed is going to do. The U.S. central bank’s policy meeting will be closely watched for commentary about the path of interest rate hikes next year as well as the pace of bond purchases tapering.
Fed would raise rates by 25 basis points to 0.25-0.50% in the third quarter of next year, followed by another in the fourth quarter according to Reuters’ latest poll, however, most saw the risk of a hike coming even sooner.
Shares of Oracle Corp (ORCL.N) jumped 16% after the enterprise software maker forecast an upbeat third-quarter outlook. The S&P 500 index (.SPX) dropped 5.2% from a record high hit on Nov. 22.
Mega-cap technology companies like Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) gained 1.3% and 1.7%, respectively, to provide the biggest boost to the major indexes.
