August 18, 2022

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By ALEX VEIGA A late wave of buying sent stocks to solid gains on Wall...

By ALEX VEIGA

A late wave of buying sent stocks to solid gains on Wall Street Friday, sending the S&P 500 to another record high. The benchmark index rose 1% and closed out its best week since February. Technology stocks powered much of the gain. Business software maker Oracle surged 15.6% after reporting strong results in its latest quarter. The gains came after the government reported another big rise in inflation last month, but markets were relieved to see that the report was in line with expectations. Consumers prices jumped 6.8% in November compared with a year earlier, the most in four decades.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Stocks are higher on Wall Street Friday following a bout of choppy early trading in the aftermath of the government’s latest reading on consumer prices, which shows inflation is at a four-decade high.

The S&P 500 was up 0.6% as of 2:35 p.m. Eastern. The benchmark index, which is coming off its first loss in four days, is on track for its biggest weekly gain since February.

The Dow Jones Industrial Average was up 123 points, or 0.3%, to 35,877, while the Nasdaq composite rose 0.3%. Both indexes wavered between small gains and losses in morning trading. The Russell 2000 index of small-company stocks was down 0.5%.

The Bureau of Labor Statistics said prices for U.S. consumers jumped 6.8% in November compared with a year earlier. Surging costs for food, energy, housing and other items have left Americans enduring their highest annual inflation rate since 1982. Core prices, which exclude food and energy, rose 4.9% year over year.

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Those figures were right in line with the market’s expectations.

“Many have felt the effects of inflation in their day-to-day, so this likely isn’t a huge shocker to the market,” said Mike Loewengart, managing director, investment strategy at E-Trade.

The latest inflation data comes ahead of the Federal Reserve’s two-day meeting of policymakers next week. Rising inflation has prompted the central bank to speed up the pace at which it trims its bond purchases, which have helped keep interest rates low.

Federal Reserve Chair Jay Powell has suggested the central bank could move more quickly to pare back, or taper, the amount of bonds it’s been purchasing each month to keep long-term interest rates low.

Analysts say the elevated inflation figures ramp up the pressure on the Fed to follow through on Powell’s comments. Many investors also expect the Fed to start raising interest rates from current ultra-low levels starting in the middle of next year.

“The inflation print from this morning will reinforce the Fed’s resolve to accelerate tapering. With the strength in the economic recovery, it is time to take the crutches away,” said Anu Gaggar, global investment strategist for Commonwealth Financial Network.

Apart from a decline Thursday, stocks have bounced back this week following two weeks of volatile trading that left the S&P 500 with back-to-back weekly losses. The index has now recovered most of the losses after the discovery of the omicron variant of COVID-19 was announced last month. It’s now up 25% for the year and close to the all-time high set on Nov. 18.

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Investors’ worries over omicron eased this week amid encouraging signs that the variant may be less dangerous than delta. Pfizer said this week that its lab tests suggest the drugmaker’s COVID-19 boosters provide protection against the new strain.

More than 60% of the stocks in the S&P 500 rose. Solid gains in technology stocks outweighed losses elsewhere in the market. Business software maker Oracle surged 16.2% for the biggest gain in the S&P 500 after reporting strong quarterly results. Microsoft rose 2.2%.

Makers and sellers of household goods also helped lift the S&P 500. Costco climbed 6.8%, while Coca-Cola rose 2.2%.

Energy futures mostly headed higher. The price of U.S. crude oil rose 1%. That helped give a modest boost to energy sector stocks in the S&P 500. Devon Energy rose 1.3%.

Communication services and financial stocks lagged the market. Facebook parent Meta Platforms fell 1%, while Citigroup slid 2.8%.

The yield on the 10-year Treasury note fell to 1.48% from 1.51% just before the inflation report came out. The yield on the two-year note dropped to 0.66%.