Stocks Soared On Friday And For The Week  Image: Bigstock Stocks soared on Friday and for the week. Disappointing earnings from Amazon on Thursday (and to a lesser extent Apple -- but it's hard to get too disappointed over record revenue), had some expecting that to be a drag on stocks on Friday. But it was not to be. Sure, Amazon was down by nearly -7%, but not the -20% that had been feared. And Apple was actually up over 7.5%. All in all on Friday, the Dow was up 2.59%, the S&P was up 2.46%, the Nasdaq was up 2.87%, and the Russell 2000 was up 2.25%. For the week, the Dow was up 5.72%, the S&P was up 3.96%, the Nasdaq was up 2.24%, and the Russell was up 6.01%. That makes it 4 weeks in a row for the Dow, and 2 weeks in a row for the others. This week, earnings season really kicks into gear with a total of 1,646 companies set to report. In other news on Friday, traders cheered the Personal Income and Outlays report which showed income up 0.4% m/m vs. estimates for 0.3%. Personal Consumption Expenditures rose 0.6% m/m vs. the consensus for 0.4%. The PCE Price Index was up 0.3% m/m (in line with expectations), and 6.2% y/y (just under expectations for 6.3%). The core PCE Price Index rose 0.5% m/m (in line with expectations), and 5.1% y/y (just under expectations for 5.1%). While the PCE numbers (a widely looked at inflation gauge by the Fed), came in as expected on a monthly basis, and slightly better on a yearly basis, there was relief that it didn't surprise on the upside. The Employment Cost Index also provided a sense of relief as it was up 1.2% q/q and 5.0% y/y, both exactly as expected, and both down from the previous month's 1.3% and 5.1% respectively. There was nothing to cheer about with the Pending Homes Sales Index as it was down -10.2% m/m vs. the consensus for -3.8%, while the index came in at 79.5 vs. last month's 88.4 and views for 88.5. But the housing market has been struggling all year, especially as interest rates have risen. So there was no surprise there. Finally, Consumer Sentiment ticked higher last month at 59.9 vs. last month's 59.8 and views for 59.7. Everybody's focus will be on Wednesday's (11/2) Fed announcement. The Fed Funds rate is currently at a midpoint of 3.13%. After three back-to-back-to-back 75 basis point rate hikes this year, the likelihood is extremely high for another 75 bps this week, which would put the Fed Funds rate at 3.88%. That would leave another 50 bps rate hike left to go in December for the Fed to hit their end-of-year target rate of 4.4%. After that (February is the first FOMC meeting of 2023), they would only need to raise by another 25 bps to reach their projected terminal rate (the rate at which they expect to keep rates steady at for a while), of 4.60%. Quite frankly, knowing that rate hikes could very well be coming to an end in just a few short months, is also probably buoying stocks. The Fed will make their announcement on rates at 2:00 PM ET, and Fed Chair, Jerome Powell, will hold his customary press conference afterwards at 2:30 PM ET. Assuming there are no surprises, this should be supportive for stocks. In the meantime, there's plenty of earnings reports and economic reports to get thru first. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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