S&P 500 gains 3.1%, Dow adds 800+ points

US stocks rose Friday, with the S&P 500 ending a three-week losing streak as investors digested Federal Reserve officials’ latest affirmations that they remained committed to bringing down inflation.

The S&P 500 rose by more than 3%, logging a back-to-back day of gains and its first weekly advance since late May. The S&P 500’s more than 6% weekly advance also marked its second best of 2022 to date. The Dow rose by more than 800 points, or 2.7%, while the Nasdaq increased by more than 3.3% as tech shares rebounded. The major averages held onto gains even after a closely watched print on consumer sentiment was revised down to a fresh record low, as Americans continued to grapple with elevated inflation. However, the survey also showed consumers’ one-year inflation expectations eased from a multi-decade high.

The three major indexes have traded choppily this week, but ultimately trended higher as investors considered the ongoing economic impact of the Fed’s moves to bring down rising prices. Fed Chair Jerome Powell made his most explicit acknowledgement yet this week that a recession was “certainly a possibility” — albeit not the “intended outcome” — as the central bank hiked interest rates further this year.

“Really, investors want the chair to understand that inflation is a significant problem and that dealing with it earlier is actually better for the long-term,” Diane Jaffee, group managing director and senior portfolio manager of TCW Group, told Yahoo Finance Live on Thursday. “So I think investors are taking heart that the Fed is going to do whatever it takes.”

Still, Powell’s nod to current recession risks tracked with increased warning signals from a series of Wall Street firms that have recently raised their own forecasts for the probability of a near-term recession. Powell’s assertion that the Fed’s commitment to bringing down inflation was “unconditional” also suggested the central bank would not stop hiking rates at the first signs of an economic slowdown.

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Cyclical stocks seen as more vulnerable during downturns dipped this week, with the energy sector posting a weekly loss and the materials sector lagging in the S&P 500. West Texas intermediate crude oil futures hovered around $107 per barrel and logged its third straight weekly loss, and headed for its first monthly loss since November.

Treasury yields increased across the curve to steady after renewed recession concerns also sent yields tumbling earlier this week. The benchmark 10-year yield rose back above 3.10%, after topping 3.31% at the start of the week.

On the move

• FedEx (FDX) shares rose after the shipping giant delivered a full-year forecast that exceeded Wall Street’s estimates, while meeting fiscal fourth-quarter profit expectations. FedEx sees full-year adjusted earnings per share coming in between $22.50 and $24.50, compared to the $22.36 seen by analysts, according to Bloomberg. FedEx Chief Customer Officer Brie Carere noted on the company’s earnings call Thursday they were anticipating business-to-consumer shipping volumes to come under some pressure next year as consumer spending continues “tilting towards services from goods.”

• Zendesk’s (ZEN) stock jumped Friday after the company announced it reached a deal to be taken private by a group of investors including Hellman & Friedman and Permira. The all-cash transaction is set to value the software company at about $10.2 billion and will offer Zendesk shareholders $77.50 per share. That represents a premium of about 34% compared to Zendesk’s closing level on Thursday.

• CarMax (KMX) shares advanced after the used vehicle retailer posted first-quarter results that topped expectations. Earnings per share of $1.56 on revenue of $9.31 billion were exceeded estimates for earnings of $1.51 per share and revenue of $8.99 billion, according to Bloomberg data. Total retail used vehicle unit sales were down 11% compared to last year, however, which CarMax said came as a result of “a lapping of stimulus benefits paid in the prior year period; widespread inflationary pressures, including challenges to vehicle affordability; and waning consumer confidence.”

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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