By Yasin Ebrahim

Investing.com — The S&P 500 rallied Friday to post its best week since November 2020, led by tech as the broader market shrugged off Federal Reserve officials calling on the central bank to get even more aggressive on rate hikes that many fear could slow the economy too much.

They rose by 1.1% and 0.8% respectively, 273 points. The rose 2.1%. These gains made it possible for all major averages to post their best week since 16 months. 

Tech’s comeback continued as it tries to break a losing streak of two weeks. Investors continued to flock to big tech.

Meta Platforms (NASDAQ) was the leader of the pack, rising more than 44%. Apple Inc (NASDAQ) rose more than 22%. Alphabet and Microsoft were each up over 1%.

Also, chip stocks are on the rise. This was supported by an Nvidia (NASDAQ) gain of more than 6.6% as Nvidia extended their rally for a forth day.

Falling interest rates helped to boost growth sectors like tech, even though Fed officials encouraged the central bank not to go any further.

Federal Reserve Governor Christopher Waller urged the Fed on Friday to increase rates and reduce the balance sheet to stop inflation.

The remarks arrived on the heels of remarks from St. Louis Fed President James Bullard, who suggested the Fed hike rates by 50 basis points several times this year to push the central bank’s benchmark rate to 3% by year end.

That would be well above the Fed’s current outlook for rates to reach about 1.9% by year end.

The broader rally in the market, triggered by weakness in defense stocks as well as a decline in FedEx, was difficult for industrials to participate in.

FedEx (NYSE 🙂 plunged 4% in the fourth quarter after reporting quarterly results which missed both top and bottom line due to higher labor costs.

Huntington Ingalls Industries (NYSE 🙂 and L3Harris Technologies Inc. (NYSE 🙂 were among the defense stocks that ended in red, as investors seemed to price in prospects of peace negotiations between Ukraine and Russia. This could be a key factor in ending the war.

Bloomberg reported that President Joe Biden warned Chinese President Xi Jinping about the “consequences” of supporting Russia’s invasion in Ukraine. 

GameStop (NYSE 🙂 closed the day 3.3% higher, despite reporting a surprising fourth quarter loss.

The stock market was expected to be volatile at the end of the week due to triple witching, which is when index options, stock futures and index option contract expire simultaneously. This usually causes wild swings as investors exit old positions to take up new ones.

There has been much debate about whether the rally seen in the wider market is the beginning of a bottoming process or if there are further downturns.

The market experts caution you against reading too much in the rally. Options expiry can cause volatility and muddy market movements. The market has yet to establish a bottom, but technical indicators such as volume and market breadth are not showing significant improvement.

“If this is the beginning of something more broad based, you’d want market breadth conditions to improve meaningfully … volume being strong as the price is going higher, but I think the jury’s still out on that,”  Chief Market Strategist David Keller at StockCharts told Investing.com in an interview on Friday.

“At at this point, I’m still thinking of it as a tradable bounce within a downtrend.” Keller added.