The S&P 500 (^GSPC) gained 0.5%, while the Dow Jones Industrial Average (^DJI) jumped 200 points, or 0.6%. The tech-heavy Nasdaq Composite (^IXIC) was flat. Bond yields continued to rise, with the benchmark 10-year currency back above 3.8% and the interest-sensitive 2-year yield moving towards 4.5%. A meeting of Fed officials on Thursday played down speculation that a pause in monetary tightening is imminent. The remarks, made in separate speeches across the country, sent stocks and bonds into a tailspin after a fleeting rally spurred by lighter inflation data. Inflation has only recently shown signs of moderation, with consumer and producer price figures still stubbornly high despite easing in October. Meanwhile, U.S. retail sales rose at their fastest pace in eight months over the same period, prompting policymakers to play down tough messages about the work that still needs to be done to reduce rising costs. Minneapolis Federal Reserve Bank President Neel Kashkari said in a webcast at the Minnesota Chamber of Commerce that the extent to which policymakers expect to raise their key federal funds rate remains an “open question.” His comments came after the president of the St. Louis, James Bullard and San Francisco Fed President Mary Daly said the central bank was considering a terminal rate of up to 5.25 percent. President and CEO of the Federal Reserve Bank of St. Louis James Bullard. (ISAAC LAWRENCE/AFP via Getty Images) “Fed Chairman Powell re-graded monetary policy at the November FOMC meeting by adopting a new ‘velocity vs. destination’ paradigm – signaling an intention to reach a higher terminal funding rate while doing so at a slower pace,” said EY Parthenon Chief Economist Gregory Daco. he said in a note. “The difficulty for the Fed will be to prevent an excessive and counterproductive easing of financial conditions in the face of weaker-than-expected inflation.” Goldman Sachs also on Thursday raised its forecast for the Federal Reserve’s benchmark interest rate to a range of 5% to 5.25%, marking another 25 basis point increase in May after increases of that size in February and March and half a percentage point in December. The story continues “Inflation is likely to remain uncomfortably high for a while, and that could put pressure on the FOMC to make a longer series of small hikes next year,” economists led by Jan Hatzius also said. Overshadowed by renewed interest rate volatility, Gap ( GPS ), Ross Stores ( ROST ) and Williams-Sonoma ( WSM ) wrapped up a busy week of retail earnings. Shares of Gap rose 7% on Friday after it reported results that beat Wall Street estimates. However, Chief Financial Officer Katrina O’Connell stressed that the macroeconomic environment remains challenging, but that Gap will take a “prudent approach in light of the uncertain consumer.” Ross Stores shares rallied 10% after the retailer beat profit forecasts and raised its fourth-quarter guidance, citing sales momentum and improved holiday assortment. Meanwhile, shares of home furnishings retailer Williams Sonoma sank 6% after it withdrew its guidance through 2024 due to “macroeconomic uncertainty.” — Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc Click here for the latest Yahoo Finance platform stock trends Click here for the latest stock market news and in-depth analysis, including the events that move stocks Read the latest financial and business news from Yahoo Finance Download the Yahoo Finance app for Apple or Android Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn and YouTube
