Wall Street ends tumultuous week with gains as tech stocks do the heavy lifting

Fourth-quarter reporting season fired on all cylinders, with 77 per cent of companies that have announced financial results delivering consensus-beating results

The Nasdaq and S&P 500 were given a huge lift by Apple, a day after the company posted record iPhone sales in the holiday quarter. Bloomberg

Wall Street advanced at the close on Friday, rebounding from selloff to rally in another ping-pong session and ending a tumultuous week with investors caught between mixed corporate earnings, geopolitical turmoil and an increasingly aggressive Federal Reserve.

All three major US stock indexes closed higher, with technology shares doing the heaviest lifting.

"There's a lot of uncertainty out there and that has contributed to volatility," said Ross Mayfield, investment strategy analyst at financial services firm Baird. "The fundamentals of companies and the economy are still quite strong. But there are a lot of items percolating, whether it's earnings, inflation, the Fed or geopolitical tensions."

Economic data released on Friday showed a drop in consumer spending coupled with the lowest consumer sentiment reading in a decade, and year-on-year Core PCE prices – the Federal Reserve's preferred inflation yardstick – came in at 4.9 per cent, slightly hotter than expected.

The Fed made it clear at the conclusion of its monetary policy meeting on Wednesday that it intends to take off its gloves and combat stubbornly persistent inflation by hiking key interest rates more aggressively than many market participants expected.

The S&P 500 gained 105.46 points, or 2.44 per cent, to end at 4,432.02 points, while the Nasdaq Composite gained 415.04 points, or 3.11 per cent, to 13,767.83. The Dow Jones Industrial Average rose 566.08 points, or 1.66 per cent, to 34,726.86.

Among the 11 major sectors of the S&P 500, tech stocks enjoyed the session's biggest percentage gains.

Fourth-quarter reporting season was firing on all cylinders, with 168 of the companies in the S&P 500 having reported. Of those, 77 per cent have delivered consensus-beating results, according to Refinitiv data.

But investors have been increasingly focused on guidance, and the extent to which companies expect ongoing global supply challenges to affect their bottom line going forward.

The fundamentals of companies and the economy are still quite strong. But there are a lot of items percolating, whether it's earnings, inflation, the Fed or geopolitical tensions

Ross Mayfield,
investment strategy analyst at Baird

"As we move into 2022, and as Omicron peaks and the weather improves, I expect supply-chain pressures to ease," Mayfield added. "[They] will probably peak some time this quarter, and ease throughout the year."

Data storage equipment maker Western Digital cited supply-chain headwinds after it reported lower than expected revenue and provided a disappointing forecast, sending its shares sliding.

Caterpillar's shares dropped following the equipment maker's warning that higher production and labour costs will pressure its profit margin.

Energy major Chevron fell on downbeat fourth-quarter profit.

However, Apple's jump gave the S&P 500 and the Nasdaq their biggest boost, the day after the company posted record iPhone sales in the holiday quarter.

Visa surged following its quarterly earnings beat driven by increased spending on international travel and e-commerce.