Wall Street ends higher, still winds up with 3rd weekly loss

A choppy day on Wall Street ended with broad gains for stocks Friday, though most of the major indexes wound up with their third weekly loss in a row.

Mixed economic news weighed on stocks early on, but the indexes rebounded by late afternoon amid relatively light trading ahead of a long holiday weekend.

The S&P 500 reversed a 0.7% loss to close 0.6% higher. With one week left of trading in 2022, the benchmark index is down 19.3% for the year.

The Dow Jones Industrial Average rose 0.5% and the Nasdaq composite eked out a 0.2% gain. The S&P 500 and Nasdaq posted their third straight weekly loss.

Relatively solid consumer spending and a strong employment market are reducing the risk of a recession but also raising the threat of higher interest rates from the Federal Reserve as it presses its campaign to crush inflation.

The government reported Friday that a key measure of inflation is continuing to slow, though it’s still far higher than anyone wants to see. The Federal Reserve monitors the inflation gauge in the consumer spending report, called the personal consumption expenditures price index, even more closely than it does the government’s better-known consumer price index.

Also, growth in consumer spending weakened last month by more than expected, but incomes were stronger than expected.

Helping to support the market was a separate report from the University of Michigan indicating U.S. households are lowering their forecasts for upcoming inflation. That could help avoid a scenario the Fed has said it’s desperate to prevent: a vicious cycle where shoppers rush to make purchases in advance of expected price rises, which would only worsen inflation.

Treasury yields rose following the reports. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.75% from 3.69 late Thursday. The yield on the two-year Treasury, which tends to track actions by the Fed, rose to 4.31% from 4.28%.

Roughly 80% of the stocks in the S&P 500 notched gains Friday. The index rose 22.43 points to 3,844.82. The Dow gained 176.44 points to 33,203.93. The Nasdaq rose 21.74 points to 10,497.86.

Oil and gas industry stocks were big gainers as energy futures prices closed broadly higher. Hess climbed 4.7%.

Communications services and financial stocks also posted solid gains. Disney rose 1.5% and American Express added 1.2%.

Small company stocks also rose. The Russell 2000 index picked up 6.85 points, or 0.4%, to 1,760.93.

Markets in Asia fell and markets in Europe closed mixed.

U.S. markets will be closed on Monday for the Christmas holiday.