STORY: A turbulent quarter for stocks ended with a rally on Friday… as signs of cooling inflation boosted hopes the Federal Reserve might soon end its aggressive interest rate hikes.
The Dow gained one-and-a-quarter percent… the S&P 500 climbed nearly one-and-a-half percent… and the Nasdaq jumped one-and-three-quarters percent to notch the index’s biggest quarterly percentage gain since June of 2020.
It was also the second straight quarter of gains for the S&P, despite a sharp sell-off in bank stocks following the collapse of two regional lenders earlier this month and worries about a potentially wider financial crisis.
Data on Friday from the Commerce Department showed consumer spending rose moderately in February while inflation cooled.
“I think what's driving the markets is specific to the Federal Reserve…”
Sam Stovall is Chief Investment Strategist at CFRA Research.
“Expectations are that if they do raise rates one more time, it'll be in May and it'll be the final one of this rate tightening cycle. And history tells us that the Fed then starts to cut interest rates an average of nine months later. So I think investors are beginning to look across the valley and hoping that the fundamentals will show improvement.”
Shares of big tech gained as U.S. Treasury yields eased, with the yield on the two-year note posting its largest monthly drop since 2008. Higher yields tend to be a negative for big tech companies.
Also, Apple shares rose Friday after it won its appeal to dismiss a UK antitrust probe into its mobile browser.