US STOCKS-Wall St rallies as Powell cements peak rate bets

BY Reuters | ECONOMIC | 12/01/23 02:37 PM EST

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Powell acknowledges risks of overtightening

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ISM shows U.S. manufacturing weakness persists

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Pfizer (PFE) dips as obesity drug trial dropped

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Tesla slips as Cybertruck priced above initial forecast

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Indexes up: Dow 0.72%, S&P 0.48%, Nasdaq 0.36%

(Updates to 14:14 EST)

By Stephen Culp

NEW YORK, Dec 1 (Reuters) -

U.S. stocks advanced on Friday, starting December with a broad rally as remarks from Federal Reserve Chairman Jerome Powell bolstered the view that interest rates have peaked.

All three major U.S. stock indexes were higher, with economically sensitive transports and smallcaps enjoying the most robust gains.

"People are bargain hunting. The stocks that haven't participated in the rally this year are powering the market higher," said Jay Hatfield, portfolio manager at InfraCap in New York. "This is clearly a broad-based rally, and it has legs."

All three indexes are on course to notch their fifth consecutive weekly percentage gains, the day after wrapping up a banner month in which the S&P 500 and the Nasdaq registered their biggest one-month percentage gains since July 2022, and the Dow close at its highest level since January 2022.

If the S&P 500 ends at or above its current level, it will be the highest close for the benchmark index so far this year.

In prepared remarks, Powell acknowledged the central bank's need to "move forward carefully" amid signs of economic softening, as the risks of over- and under-tightening its monetary policy are becoming more balanced.

"(Powell) used the word 'balanced,' and the message he's sending is the Fed's not going to change its rhetoric, but things are going the way they want them to go and they're not going to raised rates again," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "They're done, they're finished, and that's what the market thinks."

Data released on Friday showed U.S. manufacturing continues to contract as factories contend with decreasing new orders, falling inventories and labor pressures.

At 2:14 p.m. ET, the Dow Jones Industrial Average rose 258.01 points, or 0.72%, to 36,208.9, the S&P 500 gained 21.94 points, or 0.48%, at 4,589.74 and the Nasdaq Composite added 51.37 points, or 0.36%, at 14,277.59.

Among the 11 major sectors of the S&P 500, real estate notched the most robust percentage gains, while communication services was the sole decliner.

Tesla underperformed megacap peers, falling 1.2% as the electric vehicle maker priced its Cybertruck above its initial forecast.

Pfizer (PFE) slid 4.6% as the drugmaker dropped plans to advance a twice-daily version of oral weight-loss drug danuglipron into late-stage studies, delaying its entry into the lucrative market.

U.S.-listed shares of Alibaba (BABA) slipped 1.4% following Morgan Stanley's downgrade of the e-commerce giant's stock.

Marvell Technology (MRVL) shed 5.4% after the chipmaker's fourth-quarter revenue forecast fell short of Street estimates.

Ulta Beauty (ULTA) surged 10.3 after the cosmetics retailer raised the lower end of its annual net sales forecast and named Paula Oyibo its new chief financial officer.

Paramount Global (PARAA) jumped 9.6% following a report the media company and Apple (AAPL) have discussed bundling their streaming services at a discount.

Advancing issues outnumbered decliners on the NYSE by a 5.50-to-1 ratio; on Nasdaq, a 3.00-to-1 ratio favored advancers.

The S&P 500 posted 54 new 52-week highs and one new low; the Nasdaq Composite recorded 87 new highs and 68 new lows.

(Reporting by Stephen Culp; Additional reporting by Shristi Achar A and Amruta Khandekar in Bengaluru; Editing by Richard Chang)

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