The Dow Jones Industrial Average Gained 1.3 This Week, As Investors Sought Blue-Chip Stocks Amid The Heightened Volatility In The Market. The S&P 500 Rose 0.8%, Thanks To A Strong Finish On Friday, While The Nasdaq Composite (Unch) Closed Flat, And The Russell 2000 Fell 1.0%.
Six of the 11 S&P 500 sectors closed lower while five sectors closed higher. The industrials (-1.5%), utilities (-1.4%), and consumer discretionary (-1.0%) sectors fell at least 1.0%, while the energy sector (+5.0%) stood out with a 5% gain as oil prices flirted with $89 per barrel during the week.
The S&P 500 bounced within a 231-point range -- hitting technical resistance at its 200-day moving average (4435) several times -- this week. The primary concern was the Fed being more aggressive in tightening policy to the point where it slows down economic growth.
The fed funds futures market began pricing in the probability for five rate hikes this year, starting in March, following the FOMC meeting on Wednesday. Fed Chair Powell explained that policy needs to adapt to high inflation risks and that extremely accommodative policy no longer seems appropriate. The Advance Q4 GDP report and the PCE Price Index both supported the Fed Chair's case.
Accordingly, 2-yr yield rose 18 basis points to 1.17%, and the U.S. Dollar Index rose 1.7% to 97.24. The 10-yr yield increased just three basis points to 1.78%.
Investors weren't ready to give up on the market, though, especially when a lot of companies continued to beat earnings expectations. The big discounts in stock prices helped, too. Investors were selective and preferred quality over riskier stocks like Tesla (TSLA), which fell 10% following its better-than-expected earnings report.
Dow components Apple (AAPL), Microsoft (MSFT), Visa (V), Johnson & Johnson (JNJ), American Express (AXP), IBM (IBM), 3M (MMM), and Dow Inc. (DOW) posted decent gains following their reports. Caterpillar (CAT), which beat EPS estimates, was hit by commentary about higher costs and lower margins.
Despite the comeback effort late in the week, the small-cap Russell 2000 still closed lower by 20% from its all-time high.