Stocks climb in volatile trading amid news of GDP, earnings
U.S. stocks rose to a record as investors digested the latest batch of corporate earnings and data that showed that the American economy gained steam in the first three months of the year.
Apple wiped out its gains amid concern that the iPhone maker may not sustain growth after a blockbuster quarter as it faces a tightening supply of chips. Weak earnings dented Ford and eBay. Facebook held its post-earning gains, surging to a record after its sales dwarfed estimates.
The S&P 500 briefly turned negative in afternoon trading. The tech-heavy Nasdaq 100 broke a two-day losing streak. The volatility came as investors continued to assess major corporate results that overshadowed signs of a resurgence in the economy. Data released Thursday showed U.S. gross domestic product expanded at a 6.4% annualized rate in the first quarter, while applications for U.S. state unemployment insurance fell last week to a fresh pandemic low.
"It looks like it's a tug of war between those that think the good earnings results we've seen are just the beginning of a longer economic and corporate earnings boom and those that believe we are at peak growth and markets are unlikely to go higher from here," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
While the GDP figures may support the Federal Reserve's strong assessment of the economy, the central bank is in no mood to halt aggressive support as it looks for even further progress in employment and inflation. Chair Jerome Powell on Wednesday dismissed worries about price surges or anecdotes of labor shortage, implying that policymakers are prepared to run the economy hot for a while. President Joe Biden unveiled a $1.8 trillion spending plan targeted at American families, adding to the economic optimism.
With their plans, the Fed and Biden have delivered a boost to investor sentiment that has seesawed in recent days between optimism over a string of robust economic data and caution amid high valuations and speculation about stimulus tapering by year's end.
"All evidence still points to continued support from both fiscal and monetary policy against a backdrop of accelerating corporate earnings," said Mark Haefele, UBS Global Wealth Management's chief investment officer. "This reinforces our view that markets can advance further, with cyclical parts of the market - such as financials, energy, and value stocks - likely to benefit most from the global upswing."
Crude oil rose on a confident outlook on demand from OPEC and its allies, despite the threat from India's flaring coronavirus crisis.
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These are some of the main moves in markets:
- The S&P 500 rose 0.7% as of 4 p.m. New York time
- The Nasdaq 100 rose 0.5%
- The Dow Jones industrial average rose 0.7%
- The MSCI World index rose 0.4%
- The Bloomberg Dollar Spot index was little changed
- The euro was little changed at $1.2128
- The British pound rose 0.1% to $1.395
- The Japanese yen fell 0.3% to 108.89 per dollar
- The yield on 10-year Treasurys advanced two basis points, to 1.63%
- Germany's 10-year yield advanced four basis points, to -0.19%
- Britain's 10-year yield advanced five basis points, to 0.84%
- West Texas Intermediate crude rose 1.7%, to $65 a barrel
- Gold futures were little changed