Oil prices fell and the Federal Reserve provided clarity to investors about its plan to tame inflation, sparking a rally that pushed stocks into their best week in more than a year.
The S&P 500 was up 1.2 percent on Friday, the fourth consecutive day of gains, bringing the climb for the week to 6.2 percent. It was the index’s largest single-week gain since November 2020, following months of volatility that had sent major indices sharply lower this year as investors reacted to one bad economic turn after another. This week’s gains mean the S&P 500 has halved its full-year losses to about 6.4 percent.
Technology stocks, which have been hit particularly hard by concerns about rising interest rates, which would make riskier investments less attractive, recovered. Apple, the most prominent stock in the S&P 500, gained 6 percent this week. The tech-heavy composite Nasdaq index, which had fallen for four consecutive weeks, ended the week at 8.2 percent.
“Too many technically strong stocks were oversold, and in the near term it seems unlikely that Wall Street will see a material downturn as commodity prices stop skyrocketing,” said Edward Moya, senior market analyst at OANDA, a currency exchange and brokerage firm.
That volatility is probably far from over, analysts warn. But some of the pressure that had caused the once buoyant markets seemed to be easing.
The biggest daily gain was Wednesday, after the Fed finally raised its key rate by a quarter of a percentage point. It was the central bank’s first decisive step to curb inflation, which has risen at the fastest pace in 40 years. Markets had been trying to anticipate the Fed’s moves for months as policymakers tiptoed their toes to raise interest rates, with some investors and analysts fearing the central bank could act too quickly, undoing the economy’s recovery. to be made.
Policymakers forecast six more moves of similar magnitude this year, in line with investors’ expectations, and central bank chairman Jerome H. Powell reassured investors on Wednesday that the economy was strong enough to withstand higher interest rates.
Oil climbed on Friday but ended the week lower, with Brent crude around $108 a barrel. That was well below its highest level earlier this month as it approached $140 a barrel.
New lockdowns in China following a coronavirus outbreak have allayed concerns about an energy crisis as oil from Russia, which produces about 10 percent of the world’s supply, has been effectively placed on a no-buy list. It also helped that Russia and Ukraine spent much of the week negotiating a ceasefire, even as the conflict between them intensified and Russia expanded its offensive into the country.
Coral Murphy Marcos reporting contributed.
