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Wall St set for weekly gains as easing inflation spurs Fed pivot hopes

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Wall Street rose in choppy trading on Friday as data indicated easing inflation ahead of the Federal Reserve’s interest rate decision next week, while credit card giant American Express jumped nearly 11% on an upbeat forecast.

The Commerce Department’s personal consumption expenditures (PCE) index, the Fed’s preferred inflation gauge, showed a 0.1% rise last month after a similar increase in November.

U.S. consumer spending also fell in December, putting the economy on a lower growth path in 2023.

As inflation as well as the economy slows, traders stuck to their bets that the central bank will raise rates just once more beyond next week’s widely expected quarter-point hike.

Markets expect the terminal rate to rise to 4.9% in June, still below many policymakers’ expectations of beyond 5%.

“There’s a lot of volatility in markets today with investors digesting company earnings, but ultimately they are looking ahead to next week when the Federal Reserve is going to meet,” Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said.

“There are concerns that Fed chair Jerome Powell will be talking the market down.”

Separately, the University of Michigan Consumer Sentiment Survey showed that healthy incomes and easing inflation lifted the mood of U.S. consumers in January.

More than a quarter of the S&P 500 companies have reported earnings so far, of which 67.8% have exceeded analysts’ expectations, according to Refinitiv data.

Card issuer American Express Co (AXP.N) jumped 12.5% after raising its annual earnings forecast above expectations, while payment network Visa Inc (V.N) added 3% on upbeat quarterly results.

The companies were among the biggest boosts to the S&P 500 and the Dow Jones Industrial Average.

Capping gains, Intel (INTC.O) tumbled 7.8% on its worst revenue slump in at least two decades and warnings of additional losses amid weak demand for personal computers.

The Philadelphia SE Semiconductor index (.SOX) slid 0.5%.

Chevron Corp (CVX.N), fell 4.4% as its quarterly earnings missed analysts’ estimates due to asset writedowns and a retreat in oil and gas prices.

Eight of the 11 major S&P 500 sectors edged higher with the consumer discretionary sector (.SPLRCD) surging 2.2% to more than a month’s high.

At 12:49 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 117.17 points, or 0.35%, at 34,066.58, the S&P 500 (.SPX) was up 18.13 points, or 0.45%, at 4,078.56, and the Nasdaq Composite (.IXIC) was up 109.01 points, or 0.95%, at 11,621.43.

The benchmark S&P 500 and the blue-chip Dow are set to end the week over 1.5% higher, while the Nasdaq is eyeing its fourth straight week of gains.

This week, Wall Street was aided by renewed appetite for growth stocks and Tesla’s bullish outlook despite uncertainty due to companies flagging a tough macro environment.

Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the NYSE and by a 1.30-to-1 ratio on the Nasdaq.

The S&P index recorded 14 new 52-week highs and no new low, while the Nasdaq recorded 72 new highs and 29 new lows.

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