Dow jumps 600 points as market comeback this week gains steam

Stocks jumped Friday as Wall Street looked to grind out a rare positive week in what has been a rough first half of the year.

The Dow Jones Industrial Average rose 652 points, or 2.1%. The S&P 500 were 2.4% higher, while the Nasdaq Composite advanced 2.5%.

Major averages hit their highs of the session after a consumer sentiment reading closely followed by the Federal Reserve showed a slight easing of inflation expectations.

“On balance, sentiment is mixed,” wrote Terry Sandven, chief equity strategist at US Bank Wealth Management. “Consumers are getting out and paying for “experiences,” specifically travel, leisure, beauty items, household essentials, etc. Elevated inflation, particularly higher food and energy costs, are among headwinds widely expected to crimp discretionary spending in the near-term. ”

Consumer sentiment hit a record low reading of 50 in June, according to a University of Michigan survey released Friday morning. While on the surface that is not positive for the market, investors liked a figure inside the report which showed 12-month inflation expectations by consumers easing back to 5.3%.

A preliminary reading earlier this month that was pivotal in influencing the Fed to get more aggressive with its rate hike showed inflation expectations at 5.4%.

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The rally was broad-based, with 465 stocks in the S&P 500 up for the day.

Cruise line stocks led outperformance in the broad market index. Shares of Carnival Corporation rallied 9% after the company said booking volumes in its most recent quarter were “nearly double” the volumes in the first quarter, or the company’s “best quarterly booking volumes since the beginning of the pandemic.” Royal Caribbean Group surged 12%. Norwegian Cruise Line Holdings’ rallied 11%. Wynn Resorts was up 8%.

On the corporate front, shares of FedEx surged 9% despite a mixed fourth-quarter report after the logistics company delivered an upbeat earnings forecast.

Volatility on Wall Street is expected to be elevated Friday, as FTSE Russell completes its annual index rebalancing, shifting the makeup of tracking indexes that contain trillions of dollars. Rebalancing days are typically accompanied by heavy trading volumes as well.

Among the biggest changes will be the additions of tech companies such as Meta and Netflix to the Russell 1000 value index after their stock tumbles this year. Shares of Meta and Netflix spiked 5% and 4%, respectively.

The stock market appears to have found some stability this week, at least for the short term. The S&P 500 is up 4% for the week, while the Nasdaq Composite is up 5% and the Dow is 3% higher.

All three averages are looking to snap three-week losing streaks.

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