Stock market today: Wall Street closes its 3rd straight winning week with a tiny gain

NEW YORK (AP) — Wall Street's third straight week of gains came to a quiet close Friday, as stocks added another whisper to their sizzling November gains so far.

The S&P 500 rose 5.78 points, or 0.1%, to 4,514.02 and is near its highest level in three months. The Dow Jones Industrial Average rose 1.81, or less than 0.1%, to 34,947.28, and the Nasdaq composite gained 11.81, or 0.1%, to 14,125.48.

Several retailers posted strong profits after reporting better results for the latest quarter than analysts expected. Gap rose 30.6% after reporting much higher profits than Wall Street had forecast, more than doubling its stock's gain so far this year. Ross Stores rose 7.2% after reporting stronger-than-expected profits and revenue.

The loser was BJ's Wholesale Club, which fell 4.8% despite also posting better-than-expected results. Analysts pointed to an underlying sales figure that excludes the boost from store openings, which fell short of expectations.

Retailers are closing out what has been a better-than-expected summer earnings reporting season. S&P 500 companies are on track to report their first overall growth in a year, according to FactSet.

But the far more impactful factor driving stocks higher this week was the hope that inflation has cooled enough for the Federal Reserve to finally end its market-crushing interest rate hikes.

The Federal Reserve has already raised its main interest rate to the highest level since 2001, trying to slow the economy and affect financial markets enough to control inflation without causing a painful recession.

A report from Tuesday showing Inflation at the consumer level cooled. more than expected last month fueled hopes that the Federal Reserve could pull off the delicate balancing act. Later readings raised hopes after suggesting that inflation and the broader economy could be slowing.

Now traders are trying to bet on when the Federal Reserve might actually start cutting interest rates, something that can boost investment prices and provide oxygen to the financial system. The Federal Reserve has said it plans to keep rates high for a while to ensure the battle against inflation is definitively won, but traders think cuts could begin as early as summer 2024.

A potential source of concern about inflation has been declining in recent weeks. Oil prices have plunged amid concerns about a mismatch between too much crude supply and too little demand.

A barrel of US crude oil for December delivery rose $2.99 ​​to close at $75.89 on Friday, recovering some of its steep losses from earlier in the week. But it is still well below its position of over $93 at the end of September.

Brent crude, the international standard, rose $3.19 to $80.61 a barrel on Friday.

In the bond market, the 10-year Treasury yield fell to 4.43% from 4.44% late Thursday. Just a few weeks ago, it was above 5%, its highest level since 2007 and undercutting the prices of stocks and other investments.

Of course, too steep a drop in Treasury yields and too big a rally in stock prices could end up conspiring against Wall Street. Chairman Jerome Powell said after the Federal Reserve's latest meeting on interest rates that I may not walk anymore if the summer jump in Treasury yields and the decline in stock prices remained “persistent.” This is because such pressures could themselves act as substitutes for further rate increases.

Since then, yields have fallen sharply and November is on track to be the best month for the S&P 500 in a year. All of this means that financial conditions have eased by just over half the tightening seen in October, according to economists at Deutsche Bank.

Still, recent reports on inflation and the economy have been so encouraging that “the Federal Reserve can afford to worry less about this easing,” according to Justin Weidner and the other economists.

On foreign stock markets, Hong Kong's Hang Seng fell 2.1%. China Stocks E-commerce giant Alibaba slumped after canceling a plan to spin off its cloud computing unit. The company cited uncertainties due to chip restrictions in the United States.

Stock indices were mixed elsewhere in Asia, while they rose more strongly in Europe.

AP writers Zimo Zhong and Matt Ott contributed.

Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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