Wall St extends gains with growth stocks in the lead

© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 7, 2022. REUTERS/Brendan McDermid

By Amruta Khandekar and Ankika Biswas

(Reuters) - Wall Street's main indexes rose on Friday, boosted by technology and high-growth stocks, as investors awaited key inflation data next week to gauge the pace of interest rate hikes by the Federal Reserve.

U.S. equities have stabilized this week after a sharp selloff that began in mid-August on worries about the impact of tighter monetary policy and a slowdown in Europe and China.

The indexes are on track to snap their three-week losing streak, despite hawkish remarks from Fed policymakers that boosted expectations of another outsized rate hike at the central bank's Sept. 20-21 meeting.

"We got oversold in the last couple of weeks in August and this is a relief rally," said Dennis Dick, head of markets structure at Triple D Trading.

"The market is, to a certain extent, getting ahead of next week's CPI (consumer prices index) data. It's fairly predictable that the data next week is going to be light. We've had significant commodity deflation over the course of the last four weeks."

Investors will watch for the August inflation report due next Tuesday for any signs that price pressures may be easing. It is expected to show that prices rose at an 8.1% pace over the year in August, compared with an 8.5% print for July.

Traders are pricing in an 86% chance of a 75 basis point rate hike at the next meeting, up from 57% a week earlier, according to CME Group's (NASDAQ:CME) Fedwatch tool.

Fed Chair Jerome Powell said on Thursday that the U.S. central bank is "strongly committed" to controlling inflation but there remains hope it can be done without the "very high social costs" involved in prior inflation fights.

Several Fed policymakers including Fed Kansas City President Esther George, a voting member of the rate-setting committee this year, are scheduled to speak later in the day.

All 11 major S&P sectors traded higher, with communication services, technology and consumer discretionary leading the way.

High-growth stocks such as Tesla (NASDAQ:TSLA), Apple Inc (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) Inc and Amazon.com Inc (NASDAQ:AMZN) gained more than 1% each.

The CBOE volatility index, a gauge of investor anxiety, fell to a two-week low of 22.9 but stayed above its long-term average of 20.

At 10:24 a.m. ET, the Dow Jones Industrial Average was up 271.31 points, or 0.85%, at 32,045.83, the S&P 500 was up 42.48 points, or 1.06%, at 4,048.66, and the Nasdaq Composite was up 170.53 points, or 1.44%, at 12,032.66.

Still, the S&P 500 and the Nasdaq are down nearly 6% and 8.3%, respectively, from their peaks hit in mid-August, as the Fed and other major central banks reaffirmed their commitment to bring down decades-high inflation.

U.S. equity funds recorded outflows of $11.5 billion in the week to Wednesday, their largest outflow in 11 weeks, BofA said on Friday.

Kroger (NYSE:KR) Co rose 3.4% after the U.S. grocer raised its annual forecast.

Advancing issues outnumbered decliners by a 7.81-to-1 ratio on the NYSE and 3.32-to-1 ratio on the Nasdaq.

The S&P index recorded six new 52-week highs and no new lows, while the Nasdaq recorded 34 new highs and 35 new lows.