U.S. stock markets closed sharply higher on Friday reversing previous day’s sharp decline. Market participants ignored the Fed Chairman Jerome Powell’s recent warning of interest rate hike. All three major stock indexes ended in positive territory. For the week, these indexes have finished in positive zone too.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) jumped 1.2% or 391.16 points to close at 34,283.10. Notably, 26 components of the 30-stock index ended in positive territory, while 4 ended in negative zone. The blue-chip index closed above the psychological barrier of 34,000 after the gap of a single day.

The tech-heavy Nasdaq Composite finished at 13,798.11, surging 2.1% due to strong performance of large-cap technology stocks. The tech-laden index posted its biggest single-day percentage gain since May 26.

The S&P 500 climbed 1.6% to finish at 4,415.24. The broad-market index posted its highest closing level since Sep 19. All 11 broad sectors of the benchmark ended in positive territory. The Technology Select Sector SPDR (XLK), the Communication Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) advanced 2.6%, 1.6% and 1.7%, respectively.

The fear-gauge CBOE Volatility Index (VIX) was down 7.3% to 14.17. A total of 10.2 billion shares were traded on Friday, lower than the last 20-session average of 11 billion. Advancers outnumbered decliners on the NYSE by a 2.7-to-1 ratio. On Nasdaq, a 1.6-to-1 ratio favored advancing issues.

Government Bond Yields Stabilize

Wall Street regained momentum since the beginning of November primarily owing to the stabilization of the U.S. government bond yields. The yield on the benchmark 10-Year U.S. Treasury Note dropped to 4.646% after spiking to more than 5.1% the last week of October. The yield on the long-term 30-Year U.S. Treasury Note also dropped during this period.

Notably, on Nov 9, in his speech at the International Monetary Fund, the fed Chair maintained his hawkish stance and hinted at more interest rate hikes to bring down inflation to the central bank’s target of 2%. However, market participants ignored that warning.

A lower market risk-free rate of return is positive for growth sectors like technology, communication services and consumer discretionary. Consequently, stock prices of Microsoft corp. (MSFT Quick QuoteMSFT - Free Report) , Apple Inc. (AAPL Quick QuoteAAPL - Free Report) and Meta Platforms Inc. (META Quick QuoteMETA - Free Report) surged 2.5%, 2.3% and 2.6%, respectively. Microsoft and Meta Platforms currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The University of Michigan reported that preliminary consumer sentiment index for November declined to 60.4 from October’s final reading of 63.8. This is the lowest reading since May. The consensus estimate was 63.7. The sub-index for current condition fell to 65.7 in November from 70.6 in October. The sub-index for expectations slid to 56.9 in November from 59.3 in October. Both sub-indexes recorded lowest reading since May too.

Consumer’s expectations for inflation rate this year increased to 4.4% in November from 4.2% October. Over a period of five-year, consumers expect inflation to average 3.2%, up from 3% in October, marking the highest since March 2011.

Weekly Roundup

Last week was a strong one for U.S. stock markets. The three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – gained 0.7%, 1.3% and 2.4%, respectively. Wall Street witnessed two consecutive weeks of positive closing as the concern for more interest rate hikes reduced to a good extent resulting in the stabilization of government bond yields.