Stocks rose on Friday and headed for a winning week as Federal Reserve Chairman Jerome Powell prepared the markets for the central bank to pull back on some of its monetary stimulus, saying it’s likely to start tapering its $120 billion in monthly bond purchases this year.
The Dow Jones Industrials leaped 210.9 points to pause for lunch at 35,424.02.
The S&P 500 restored 34.49 points to 4,504.49.
The NASDAQ Composite hiked 159.87 points, or 1.1%, to 15,106.08
The three major stock averages are all set to close the week in the green. The Dow is up 0.9% week-to-date, while the S&P 500 is up 1.4% and the NASDAQ is 2.5% higher.
Energy stocks led the S&P higher, after being among the hardest hit on Thursday. Occidental Petroleum climbed 6%, APA Corp and Cimarex Energy rose 5% and Marathon Oil gained 4%.
Shares of Workday surged 11% after reporting strong currently earnings and subscription revenue that jumped 23% from last year. Gap gained nearly 2% after the apparel retailer’s quarterly earnings report beat on top and bottom lines, while Peloton shares dropped after the exercise equipment company’s fourth-quarter financial results missed Wall Street estimates. Peloton fell 8%.
Powell also said inflation is solidly around the central bank’s 2% target rate, one of the goals of the Fed’s dual mandate. It has “much ground to cover” to reach its other goal of maximum employment, however, though there has “been clear progress” toward it, Powell added. The Fed has used the term “substantial further progress” as a benchmark for when it will start tightening policy.
Based on statements from other Fed officials, a tapering announcement could come as soon as the Fed’s Sept. 21-22 meeting.
Prices for 10-Year Treasurys were higher, with yields fading to 1.32% from Thursday’s 1.35%. Treasury prices and yields move in opposite directions.
Oil prices regained $1.24 to $68.66 U.S. a barrel.
Gold prices spiked $22.20 to $1,817.40 U.S. an ounce.