Stock market today: Stocks sizzle on hopes of a more dovish Fed

Markets ended the week on a positive note on Friday, ending sharply higher after some economic data raised the possibility of a slower pace of rate hikes from the Federal Reserve.

The blue chips Dow Jones Industrial Average climbed 2.6% to end at 32,861, while the wider S&P500 jumped 2.5% to 3,901. The tech-heavy Nasdaq Compound jumped 2.9% to end at 11,102.

Friday’s session ended a tumultuous week of mixed trading on an upbeat note, fueled by disappointing quarterly reports from many of the biggest tech companies. Friday was from Amazon.com (AMZN (opens in a new tab), -6.8%) plunged as shares fell after the e-commerce and cloud computing giant announced a pessimistic revenue forecast for the holiday shopping season. ParentGoogle Alphabet (GOOGL (opens in a new tab)), parent Facebook Metaplatforms (META (opens in a new tab)) and Microsoft (MSFT (opens in a new tab)) all delivered discouraging results earlier in the week.

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But Friday’s action was dominated by a better-than-expected reading on inflation. The core personal consumption expenditure index, which is the Fed’s preferred measure of inflation, gained 0.5% month-over-month in September. The figure was just below economists’ expectations and fueled hopes that the central bank could slow its pace of raising interest rates.

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The best healthcare stocks to buy

A slowdown in the pace of inflation is to be expected if the economy is truly headed for a slowdown, and that only reinforces the case for stocks holding up well in a bear market. Although the initial reading of third-quarter gross domestic product came in at a better-than-expected 2.6% annual rate (opens in a new tab) – and rebounded after two straight quarters of contraction – experts say underlying data points to increasingly weak economy (opens in a new tab). If this turns out to be the case, investors would be well advised to adopt strategies that work in a bear market. (opens in a new tab). Add Reliable and Rising Dividend Payers (opens in a new tab) to a portfolio can certainly help people’s returns hold up in bear markets, especially when those names are concentrated in defensive sectors. The Best Consumer Staples Stocks (opens in a new tab) are a good starting point.

But few sectors are as dividend-rich and defensive as healthcare. The driving narrative of the past few years has been the industry’s response to COVID-19, and some of those tailwinds are starting to ease. We found several healthcare stocks poised for new heights (opens in a new tab) as the pandemic continues to ebb.

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