Wall St eyes its best week of the year as recession fears subside

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US single-family housing starts tumble in July

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S&P 500, Nasdaq set for best week since October

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Indexes up: Dow 0.27%, S&P 500 0.21%, Nasdaq 0.25%

By Stephen Culp

NEW YORK, - U.S. stocks edged higher on Friday, extending their biggest weekly percentage gains of the year as worries of an economic downturn eased and investors focused on the Jackson Hole symposium next week.

The S&P 500 and the Nasdaq were poised to notch their seventh straight session of gains, as stocks recouped losses from a tailspin two weeks ago, which was brought on by weak economic data and heightened fears of recession and confirmed the Nasdaq had entered correction territory.

All three indexes are on course for their biggest weekly percentage gains since October, with the S&P 500 and the Nasdaq on track for their first weekly gain in five.

"It has been a great week, and it has been a great year. There's been some volatility, but major indices are all up nicely," said Oliver Pursche, senior vice president at Wealthspire Advisors in New York.

"What we saw a couple weeks ago was the market blowing off some steam."

A barrage of high profile economic data this week, including the Labor Department's consumer price index and a retail sales report from the Commerce Department, provided assurances that inflation continues meandering down toward the Fed's goal, and American consumer is alive and well.

Data on Friday showed U.S. single-family housing starts dropped to a near 1-1/2-year low in July, while the University of Michigan's preliminary take on August consumer sentiment showed stronger-than-expected improvement.

"Economic news continues to be decent and some of the data that has come out his week has fueled the rally, suggesting fears of an imminent recession are overblown," Pursche said. "Inflation continues to come down and the probability of the Fed lowering rates by 25 basis point in September are now pretty high."

Global central bank officials will speak at the symposium in Jackson Hole, Wyoming, next week, with Federal Reserve Chair Jerome Powell's keynote speech on Friday potentially setting expectations for a U.S. rate cut trajectory.

Chicago Fed chief Austan Goolsbee said in an interview with National Public Radio that central bank officials should be wary of maintaining restrictive policy longer than necessary.

Financial markets are betting on a 74.5% likelihood that the Fed will cut its key policy rate by 25 basis points as it ends its September policy meeting, with a diminishing 25.5% possibility of a super-sized 50-basis-point cut, CME's FedWatch tool showed.

As of 2:04 p.m. ET, the Dow Jones Industrial Average rose 108.6 points, or 0.27%, to 40,671.66, the S&P 500 gained 11.85 points, or 0.21%, at 5,555.07 and the Nasdaq Composite added 44.71 points, or 0.25%, at 17,639.21.

Among the 11 major sectors of the S&P 500, financials enjoyed the biggest percentage gain, while real estate was down the most.

Applied Materials slid 1.7%, reversing its surge after the chip-making equipment firm forecast stronger-than-expected fourth-quarter revenue.

Amcor posted a bigger-than-anticipated decline in fourth-quarter sales. The packaging company's U.S.-listed shares dropped 4.9% in the wake of the report.

Advancing issues outnumbered decliners on the NYSE by a 2.04-to-1 ratio; on Nasdaq, a 1.53-to-1 ratio favored advancers.

The S&P 500 posted 12 new 52-week highs and no new lows; the Nasdaq Composite recorded 57 new highs and 73 new lows.

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