On Friday, the Dow Jones gained 0.61 percent, to 33,949 points, while the S&P 500 rose 1.10 percent, 4,060 points, and the Nasdaq index rose 1.76 percent, to 11,512 points.
The indexes grew thanks to investors’ hope that the American economy would “softly land” and thus avoid recession.
In the last quarter of last year, GDP grew by 2.9 percent at an annualized level, slightly above analysts’ expectations, despite last year’s aggressive increase in interest rates by the US central bank, the Federal Reserve (Fed).
At the same time, inflationary pressures eased, while the labor market is still solid, although demand has weakened somewhat.
Director at JPMorgan Private Bank, David Carter, said it is a double-edged sword because the Fed could keep key interest rates at restrictive levels for a long time.
Investors Hope for Small Interest Rate Hikes
Investors hope the Fed will raise interest rates at the February meeting by only 0.25 percentage points, not 0.5 points, as in last year’s meeting.
In addition, they hope that the final interest rate at which the Fed would stop the hike cycle could be less than five percent. However, most Fed leaders have said they should raise interest rates above five percent to curb inflation.
Investors also focus on companies’ business results under pressure due to high inflation and slowing economic growth.
Reports have been published so far by more than a quarter of the companies from the S&P 500 index, of which about 67 percent have recorded higher profits than expected.
However, analysts polled by Reuters estimate that companies’ earnings from the S&P 500 index fell 2.7 percent in the fourth quarter of last year compared to the same period a year earlier. In comparison, analysts expected a 1.6 percent drop in earnings at the beginning of the year.
Share prices rose on the European stock markets as well. The London FTSE index gained 0.21 percent, to 7,761 points, while the Frankfurt DAX rose 0.34 percent, to 15,132 points, and the Paris CAC 0.74 percent, to 7,095 points.