Market Snapshot: Dow surges more than 800 points to score longest weekly win streak since November 2021 as U.S. stocks close sharply higher

How did stocks trade?

• The Dow Jones Industrial Average
  DJIA,
  +2.59%
  jumped 828.52 points, or 2.6%, to close at 32,861.80, rising for sixth straight day to book its longest daily win streak since May 27.

• The S&P 500
  SPX,
  +2.46%
  gained 93.76 points, or 2.5%, to finish at 3,901.06.

• The Nasdaq Composite
  COMP,
  -8.39%
  advanced 309.78 points, or 2.9%, to end at 11,102.45.

The S&P 500 and Nasdaq each booked a second straight weekly gain, while the Dow rose for a fourth straight week. The Dow jumped 5.7% this week, the S&P 500 gained about 4% and the Nasdaq rose 2.2%, according to Dow Jones Market Data.

What drove markets?

Major U.S. stock benchmarks jumped Friday, as investors assessed fresh economic data that appeared to do little to shake their belief that the Federal Reserve might slow its pace of interest-rate hikes late this year.

Read: Another Fed jumbo rate hike is expected next week and then life gets difficult for Powell

For the most part, Friday’s economic data came in “pretty much” as expected, including readings on inflation, spending and income, according to Randy Frederick, managing director of trading and derivatives at Charles Schwab. That left the market’s hope intact that the Fed’s rate increase next week, which is expected to be a large, three-quarters of a percentage point move, will probably be the “the last one of that size,” he said in a phone interview.

All eyes were on the Dow Friday, with the blue-chip gauge’s strong advance so far in October paring its 2022 losses to 9.6%. The Dow has surged 14.4% this month, leaving the index on track for its best October performance since it was created in the late 19th century. The Dow is on track for its strongest monthly gain since January 1976.

The big gain is partly tied to the Dow’s composition. The index is generally light on technology stocks, while including more of the energy and industrial stocks that have outperformed this year.

“The Dow just has more of the winners embedded in it and that has been the secret to its success,” said Art Hogan, chief market strategist at B. Reily Wealth.

Don’t miss: Why the Dow is having a killer month as it heads for best October ever

Brad Conger, deputy chief investment officer at Hirtle, Callaghan & Co., said Friday’s data didn’t interfere with mounting expectations that the Fed might soon pause its campaign of aggressive rate hikes. “Basically, the market is starting to price in a pause, not a pivot, but maybe a pause. The end is in sight,” Conger said.

The September core personal consumption expenditures price index — the Fed’s preferred gauge of inflation pressures — came in roughly in line with economists expectations, while a more modest 1.2% gain in private wages and salaries in the third quarter was interpreted as a sign that wage growth may have finally peaked, according to Andrew Hunter, senior U.S. economist at Capital Economics.

“The Federal Reserve has not yet broken the persistent trend in core inflation and so will likely stay aggressive at next week’s meeting. However, some areas of the economy show significant weakness and could build the case that the Fed downshifts to smaller rate hikes in 2023,” said Jeffrey Roach, chief economist for LPL Financial, in emailed comments Friday.

See: Market expectations start to shift in direction of slower pace of rate hikes by Fed

Meanwhile, the final reading of the University of Michigan consumer sentiment index for October rose to 59.9, from 58.6 in September, and was up slightly from an initial reading of 59.8.

See: GDP looked great for the U.S. economy, but it really wasn’t

This week investors also have digested a batch of disappointing earnings results from some of America’s largest tech companies, which helped to sully the overall quality of S&P 500 earnings.

On Thursday night, Amazon.com Inc.
AMZN,
-6.80%
joined Microsoft Corp.
MSFT,
+4.02%,
Alphabet Inc.
GOOGL,
+4.41%
and Meta Platforms Inc.
META,
+1.29%
in releasing results that disappointed for the quarter ending Sept. 30.

Still, in aggregate, S&P 500 companies are beating earnings expectations by 3.8%, according to Refinitiv data. That compares with a long-term average of 4.1% since 1994.

“Investors anticipated the worst-case scenario for earnings,” said Robert Schein, chief investment officer at Blanke Schein Wealth Management, by phone Friday. While “expectations were set lower,” he said, “we’re seeing earnings still grow.” S&P 500 earnings are increasing at a slower rate, but investors haven’t seen the broad “falloff” that they feared, Schein said.

However, if energy firms are excluded, the picture darkens substantially.

Opinion: The cloud boom has hit its stormiest moment yet, and it is costing investors billions

Shares of Amazon dropped 6.8% Friday after the e-commerce giant, which dominates the consumer-discretionary sector, predicted slower holiday sales and profit while also reporting slower-than-expected growth in its key cloud-computing business.

One notable exception to the downbeat earnings news this week was Apple Inc.
AAPL,
+7.56%,
which proved a bright spot after the iPhone maker’s revenue and earnings topped forecasts, helped by record back-to-school sales of Macs. Apple shares jumped Friday, closing 7.6% higher.

Which companies were in focus?

• Oil giants Chevron Corp.
  CVX,
  +1.17%
  and Exxon Mobil Corp.
  XOM,
  +2.93%
  rose Friday after reporting strong results. Shares of Chevron, which is a Dow component, gained 1.2%, while Exxon climbed 2.9%.

• Pinterest Inc.
  PINS,
  +13.75%
  also saw strong sales and profit in the third quarter, beating Wall Street expectations. The company’s shares soared 13.8%.

• Intel Corp.
  INTC,
  +10.66%
  shares jumped 10.7% after reporting an earnings beat. The chip maker said it would cut costs by $3 billion next year, and lay off employees, as it trimmed its outlook again.

See also: Live Markets coverage

—Barbara Kollmeyer contributed to this report.