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Stocks closed at new session highs in another day of big swings, with the tech sector buoyed by Apple.
The Nasdaq (COMP.IND) +3.1% performed the best among the major averages.
The S&P 500 (SP500) +2.4% roared back at the close and the Dow (DJI) +1.7% was up as well, getting hit by a post-earnings price drop in Caterpillar. For the week, the Dow Jones jumped +1.3%, the Nasdaq broke even and S&P rose +0.7%.
Ten of 11 S&P sectors finish higher, with Info Tech at the top, followed by Real Estate. All six megacaps close in the green. Energy is the weakest sector.
Treasury yields came off highs after inflation numbers. The 10-year is down 2 basis points to 1.79%, and the 2-year slips 2 basis points to 1.17%.
“Inflation not hotter than expected,” Bill Baruch of Blue Line Futures tweeted. “Personal Income is soft, does not stoke inflation. Employment Cost Index is soft, does not stoke inflation. Personal Spending contracted.”
The employment cost index rose 1% in Q4, lower than 1.2% rise expected. The core PCE index, the Fed’s favorite gauge, hit its highest annual rate since 1983 at 4.9%, but that was in line.
“One quarter’s data prove nothing, but with labor participation creeping higher, and measures of excess demand flattening in recent months, it is reasonable to think that wage growth is unlikely to re-accelerate dramatically,” Pantheon Macro’s Ian Shepherdson writes. “In the meantime, this report eases the immediate pressure on the FOMC to act aggressively; the sighs of relief from Fed Towers should be audible on Wall Street.”
At the same time, though, Wall Street is ramping up its expectations of how many times the Fed will hike this year. Five looks like the new consensus and BofA is looking for seven.