Dow tops 36,000 as stocks end with gains following remarks by Fed's Powell, S&P 500 clinches highest close since March 2022

By Christine Idzelis and Joseph Adinolfi

Dow notches fifth straight week of gains

U.S. stocks ended higher Friday, with the Dow Jones Industrial Average scoring a fifth straight week of gains, as Treasury yields fell even after Federal Reserve Chairman Jerome Powell said it was too soon to begin talking about rate cuts.

How stock indexes traded

The Dow Jones Industrial Average DJIA rose 294.61 points, or 0.8%, to close at 36,245.50.The S&P 500 SPX gained 26.83 points, or 0.6%, to finish at 4,594.63, scoring its highest close since March 30, 2022.The Nasdaq Composite COMP climbed 78.81 points, or 0.6%, to end at 14,305.03.

For the week, the Dow gained 2.4%, the S&P 500 rose 0.8% and the Nasdaq increased 0.4%. All three major U.S. stock indexes booked a fifth straight week of gains, according to Dow Jones Market Data.

What drove markets

U.S. stocks advanced Friday, with the S&P 500 seeing its highest close of the year and the Dow breaking above 36,000 for the first time since January 2022, according to Dow Jones Market Data.

Falling bond yields are helping to lift the U.S. equities market, with the Dow rising for a fifth straight week in its longest winning streak since Nov. 5, 2021, FactSet data show.

The 10-year Treasury yield has come down "pretty substantially" over the past month and that decline is continuing, said Josh Jamner, investment strategy analyst at ClearBridge Investments, in an interview Friday. "The lower 10 year is what's driving the stock market higher."

Treasury yields have declined on investor expectations that the Federal Reserve may begin cutting interest rates next year.

See: Dow near record high because traders are calling bluff on 'higher-for-longer' Fed

Yet Fed Chair Jerome Powell said Friday in remarks at Spelman College in Atlanta that "it would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease. We are prepared to tighten policy further if it becomes appropriate to do so."

Despite Powell's tough talk on rates, Treasury yields continued to fall, while the S&P 500 swung higher after in November booking its biggest monthly gain since July 2022, FactSet data show.

The yield on the 10-year Treasury note BX:TMUBMUSD10Y fell 12.4 basis points on Friday to 4.225%, the lowest rate since Sept. 1 based on 3 p.m. Eastern Time levels, according to Dow Jones Market Data. That's down from around 5% in October.

Markets viewed Powell's comments on Friday as "inching toward the dovish camp," said Jeffrey Roach, chief economist at LPL Financial, in emailed commentary. "A few weeks ago, Powell said policy is restrictive but today, he believes policy is 'well into restrictive territory.' I think it's fair for markets to latch on to that subtlety."

Read: Dow near record high because traders are calling bluff on 'higher-for-longer' Fed

Earlier in the week, encouraging inflation data and comments from Fed Gov. Christopher Waller helped fuel investor hopes for rate cuts in the first half of next year.

Investors also weighed a fresh reading of business conditions at American factories, with the Institute for Supply Management saying Friday that economic activity in the manufacturing sector contracted in November for a 13th straight month.

See: Manufacturers still treading water, ISM survey shows: 'Demand remains soft.'

"I think investors feel more confident that a soft landing is definitely a possibility" for the U.S. economy, said Anthony Saglimbene, chief market strategist at Ameriprise Financial, in a phone interview Friday. "The hard-landing scenario is kind of coming off the table."

Next week investors will be watching for the U.S. employment report, due out on Dec. 8, for jobs growth data in November.

Markets had a memorable November, with big rallies in stocks and bonds. Ten of the S&P 500's 11 sectors finished the month in the green, with energy being the sole to fall amid a drop in crude-oil prices.

"We had a very strong November," with stock-market breadth improving, said Saglimbene. "If the rally is going to build steam, you want to see more areas of the market start to participate."

Most of the S&P 500's sectors climbed higher on Friday, except for communication services XX:SP500.50, which finished with a modest decline of 0.2%, according to FactSet data.

Companies in focus

Tesla Inc. TSLA shares slipped 0.5% following Thursday's Cybertruck delivery event. Salesforce Inc. CRM shares climbed 3.2% a day after they helped propel the Dow's rise on Thursday. The blue-chip gauge also benefited from gains in Walgreens Boots Alliance Inc. WBA and Nike Inc. NKE shares. Shares of Fisker Inc. FSR jumped 9.5% after the electric-vehicle maker said it decided to cut December production to free up more than $300 million of liquidity.Ulta Beauty Inc.'s ULTA stock surged 10.8% after the beauty company's latest earnings report beat third-quarter consensus estimates.Pfizer Inc. PFE shares dropped 5.1% after the company said it would not move to a Phase 3 trial of a twice-daily formulation of a weight-loss drug after patients in an earlier study had a lot of side effects.

Steve Goldstein contributed to this article.

-Christine Idzelis -Joseph Adinolfi

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12-01-23 1638ET

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