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* PCE price index indicates inflation peaked in March
* Dell climbs on strong Q1 results
* Gap, American Eagle Outfitters cut profit forecasts
* Indexes jump: Dow 1.76%, S&P 2.47%, Nasdaq 3.33%
NEW YORK, May 27 (Reuters) - Wall Street closed sharply
higher on Friday as signs of peaking inflation and consumer
resiliency sent investors into the long holiday weekend with
growing optimism that the Federal Reserve will be able to
tighten monetary policy without tipping the economy into
recession.
All three major U.S. stock indexes brought a decisive end to
their longest weekly losing streaks in decades.
The S&P and the Nasdaq suffered seven consecutive weekly
declines, the longest since the end of the dot-com bust, while
the blue-chip Dow's eight-week selloff was its longest since
1932.
"The market has now discounted a lot of the negative news, a
lot (of which) hit all at once," said Keith Buchanan, portfolio
manager at GLOBALT in Atlanta. "Now we have absorbed that news
and the actions the Fed is going to take, and were wrapping up
earnings season."
"The signs are lining up and the boxes are being checked
that we expect to develop when the market starts to form a
bottom," Buchanan added.
During the S&P's seven straight weeks of losses, from its
April 1 to May 20 Friday closes, the bellwether index shed 14.2%
of its value and threatened to confirm it has been in a bear
market since its Jan. 3 record closing high.
But this week, in a sharp reversal, the S&P reclaimed much
of that lost ground by soaring 6.6%, its best week since
November 2020.
"It was inevitable that the losing streak would end," said
Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in
New York. "Corrections and bear markets are followed by 'up'
markets."
Generally upbeat earnings guidance and solid economic
indicators have fueled hopes that the Fed's hawkish maneuvers to
contain decades-high inflation will not cool the economy into
contraction.
Data released on Friday showed better-than-expected consumer
spending and appeared to confirm that inflation, which has
dampened corporate earnings guidance and weighed on investor
sentiment, has peaked.
This, combined with the minutes from the central bank's most
recent policy meeting, which reaffirmed its commitment to rein
in spiking prices while remaining responsive to economic data,
helped boost risk appetite.
The Dow Jones Industrial Average rose 575.77 points,
or 1.76%, to 33,212.96, the S&P 500 gained 100.4 points,
or 2.47%, to 4,158.24 and the Nasdaq Composite added
390.48 points, or 3.33%, to 12,131.13.
All 11 major sectors of the S&P 500 advanced amid light
trading, with consumer discretionary, tech
and real estate notching the biggest percentage gains.
Shares of Apple Inc, Microsoft Corp and
Tesla Inc provided the strongest lift.
First-quarter earnings season is largely in the bag, with
488 of the companies in the S&P 500 having reported. Of those,
77% have beaten consensus expectations, according to Refinitiv.
Ulta Beauty gained 12.5% following its upbeat
quarterly earnings report.
Computer hardware company Dell Technologies Inc
surged 12.9% after beating quarterly profit and revenue
estimates.
Apparel retailers Gap Inc and American Eagle
Outfitters trimmed their annual profit forecasts. The
latter dropped 6.6%, while the former rebounded and ended up
4.3%.
Trading volumes were light ahead of the long weekend, with
U.S. stock markets closed on Monday in observance of Memorial
Day.
Volume on U.S. exchanges was 10.92 billion shares, compared
with the 13.13 billion average over the last 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a
6.49-to-1 ratio; on Nasdaq, a 4.13-to-1 ratio favored advancers.
The S&P 500 posted 3 new 52-week highs and 29 new lows; the
Nasdaq Composite recorded 40 new highs and 84 new lows.
(Reporting by Stephen Culp in New York
Additional reporting by Devik Jain and Anisha Sircar in
Bengaluru
Editing by Vinay Dwivedi and Matthew Lewis)