NEW YORK, March 31 (Reuters) – Wall Street rallied more than 1% on Friday and the Nasdaq saw its biggest quarterly percentage gain since June 2020, as signs of cooling inflation boosted hope that the Federal Reserve may end its aggressive interest rate hikes.
The S&P 500 closed at its highest level since Feb. 15 and posted a second straight quarter of gains, led by the technology sector (.SPLRCT) up 21.5% in the first quarter.
The quarterly gains came despite a sharp sell-off in bank stocks following the collapse of two regional banks earlier this month and worries about a potentially wider financial crisis.
The S&P 500 financials sector (.SPSY) was the worst-performing sector in the quarter, posting a 6.1% decline, while the KBW regional bank index (.KRX) fell 18.6% for the period.
A Commerce Department report on Friday showed US consumer spending rose modestly in February as inflation cooled.
“The equity market seems pleased with the slight drop in inflation, as it should be. It underscores that the Fed’s campaign is, in fact, working, albeit slowly,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.
The Fed raises rates to cool inflation. Expectations for a 25 basis point rate hike at its May meeting have fallen to around 50%, with no hike seen as likely.
The Dow Jones Industrial Average (.DJI) rose 415.12 points, or 1.26%, to 33,274.15, the S&P 500 (.SPX) gained 58.48 points, or 1.44%, to 4,109.31 and the Nasdaq Composite (.IX) gained 48.48 points, or 1.44%, to 4,109.31. added 4 points. 1.74%, to 12,221.91.
For the week and month, stocks also posted strong gains. The Nasdaq rose 6.7% for March.
For the quarter, the Nasdaq jumped 16.8% in its biggest quarterly percentage increase since the three months ended June 2020. The S&P 500 gained 7% and the Dow rose 0.4% in the quarter, based on the latest available data.
Semiconductors were among the strongest performing stocks in the quarter, with the Philadelphia semiconductor index (.SOX) up 27.6%.
Shares of the big tech rallied as investors spun out of banks and as US Treasury yields fell, with the two-year note yield posting on Friday its biggest monthly decline since 2008. Higher yields tend to be negative for large tech companies.
Shares of Apple Inc ( AAPL.O ) ended up 1.6% on Friday, rising along with other megacaps. It also won its appeal against Britain’s antitrust regulator’s decision to launch an investigation into its mobile browser and cloud gaming services.
Also on Friday, Boston Fed President Susan Collins said that wherever the US central bank stops its rate hikes, maintaining that level for some time will be critical to helping bring high inflation back to 2%. that target.
Volume on US exchanges was 11.98 billion shares, compared with the 12.74 billion full-session average over the past 20 trading days.
Advancing issues outnumbered decliners on the NYSE by a 4.78-to-1 ratio; on the Nasdaq, a 2.45-to-1 ratio favored advances.
The S&P 500 posted 19 new 52-week highs and no new lows; the Nasdaq Composite recorded 81 new highs and 131 new lows.
Reporting by Caroline Valetkevitch; additional reporting by Amruta Khandekar and Ankika Biswas; additional reporting by Johann M Cherian Editing by Vinay Dwivedi, Maju Samuel and Richard Chang
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