Nasdaq, S&P 500, Dow Jones rally as tech takes the lead

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Stock are riding a tech rebound on Friday to the first winning week in nearly two months.

The Nasdaq (COMP.IND) +2.6%, up 309 to 12,050, S&P 500 (SP500) +1.1%, up 74 to 4,132, and Dow (DJI) +1.1%, up 345 to 32,981, are higher.

All 11 S&P sectors are higher, led by Info Tech. All the megacap stocks are higher. Consumer Staples is the weakest.

Stocks look sure to break their weekly losing streak. At the start of the day, the S&P was up nearly 5% after seeing-seven straight losing weeks.

The 10-year Treasury yield is down 2 basis points 2.74%, while the 2-year is flat around 2.49%.

Risk appetite “has been further supported by growing speculation that the Fed won’t be as aggressive in hiking rates as had been speculated just a few weeks ago,” Deutsche Bank’s Jim Reid said. “I’m not sure I agree with that conclusion but if you look at the futures-implied rate by the December 2022 meeting of 2.64%, that is some way down from its peak of 2.88% back on May 3rd, and in fact means that markets have now taken out just shy of one 25bp hike from the rate implied by year end, which makes a change from that pretty consistent move higher we’ve seen over recent months.”

April personal spending rose more than expected, up 0.9%. The Fed’s favorite inflation gauge, the core personal consumption expenditures price index, was up 4.9% annually, down from 5.2%.

“So (the PCE) supports the idea that a tentative peak in inflation may have been observed in March,” RSM economist Joseph Brusuelas said. “It may be a ‘rocky peak’ but a peak nevertheless. A small step in the right direction.”

The data comes “reminding investors it is normally a bad idea to go short the hedonism of the US consumer,” UBS chief economist Paul Donovan said. “However, patterns of consumption are changing, with demand for certain durable goods slowing significantly.”

“That matters to Asian exporters and to US inflation. The inflation data today is expected to confirm March as the inflation peak -remember that year-over-year rates say as much about last year’s price level as they do about this year’s price level.”

Among active stocks, Ulta Beauty is the top gainer in the S&P after smashing earnings expectations.