The three main Wall Street indices ended Friday higher for the day and week, with the S&P 500 and the Dow Jones Industrial Average breaking closing records, as investors took strong economic data and bank earnings as signs of momentum in the US recovery from the COVID-19 pandemic.
Nine of the 11 S&P sub-sectors rose. The energy and information technology indices were the exceptions. The former, falling 0.9 percent, was weighed by lower oil prices, while the latter was marginally lower.
The S&P 500 and the Dow Industrials recorded their fourth straight week of gains. The S&P 500 scored three closing highs this week, while the Dow surpassed its best finish two days running.
The technology-heavy NASDAQ Composite finished less than 1 percent below its all-time closing high achieved on Feb. 12.
Investor confidence on the road ahead seems steady, with the volatility index, Wall Street’s fear gauge, falling 1.9 percent to its lowest close in 14 months.
“Everyone is looking at just how far we can run before we start raising interest rates,” said George Catrambone, head of Americas trading at DWS Group.
“Until we see that significant inflation growth and the Fed starts to talk about raising interest rates, I think it’s going to be goldilocks conditions,” he said.
Reporting a 150 percent jump in quarterly profit on Friday, Morgan Stanley joined other big US banks in posting first-quarter numbers reinforcing hopes of a swift economic recovery.
Still, the investment bank’s shares fell 2.8 percent as it also disclosed an almost US$1 billion loss from the collapse of private fund Archegos Capital Management LLC.
Shares of JPMorgan Chase & Co, Goldman Sachs Group, Bank of America Corp and Wells Fargo & Co rose 0.7 to 3.8 percent. The S&P financials index climbed to a second consecutive record finish.
“When this is all put in context, and compared with other sectors, including technology, we’re going to see the financials’ results look very powerful,” TCW Group Inc senior portfolio manager Diane Jaffee said.
“Given what we know about the Fed’s loosening on caps for dividend increases and buybacks after the next CCAR results in June, I think we’ll have a very strong half-year — at least — for financials,” she said.
The Dow Jones Industrial Average on Friday rose 164.68 points, or 0.48 percent, to 34,200.67; the S&P 500 gained 15.05 points, or 0.36 percent, at 4,185.47; and the NASDAQ Composite added 13.58 points, or 0.1 percent, at 14,052.34.
For the week, the S&P rose 1.4 percent, the Dow added 1.2 percent and the NASDAQ gained 1.1 percent.
The US Federal Reserve’s pledge to keep interest rates low despite higher inflation has also revived demand for richly valued technology stocks, although bond yields edged higher again on Friday after hitting multiweek lows a day earlier.
Of the tech-related behemoths that helped led Wall Street’s recovery last year from the pandemic-fueled crash, Apple Inc slipped 0.3 percent on Friday, but Amazon.com Inc, Tesla Inc and Microsoft Corp all gained 0.1 to 0.6 percent.
Volume on US exchanges was 9.99 billion shares, compared with the 11.02 billion average for the full session over the past 20 trading days.
Advancing issues outnumbered declining ones on the New York Stock Exchange by a 1.36-to-1 ratio; on NASDAQ, a 1.20-to-1 ratio favored decliners.
The S&P 500 posted 140 new 52-week highs and no new lows; the NASDAQ Composite recorded 154 new highs and 102 new lows.
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