Both the Dow Jones and the S&P 500 rallied Friday to close out their best weeks since 2020.
The Dow gained 575.77 points to 33,212.96, for a 1.8% gain. The S&P 500 gained 2.5% to land at 4158.24. The Nasdaq soared 3.3% to hit 12,131,13 after strong earnings reports from software companies. All three indexes benefited from a slowing inflation report which buoyed investor sentiment. The Core Personal Consumption Index in particular, uplifted moods, when it showed the 5.2% rise seen in March had slowed to 4.9% in April. The Fed is known to put particular stock in it as a measure of inflation. This led to assumptions it will affect monetary policy going forward, and the Fed will not have to slow the economy as much with monetary tightening to contain inflation.
The Dow ended up gaining 6.2% for the week, while the S&P 500 gained 6.5% over the week, and the Nasdaq made 6.8% for the week.
Tom Martin, senior portfolio manager at Globalt Investments, told CNBC, “We’re taking a breather here and making some adjustments in the market to allow for that. We have come a long way down pretty fast and if we can stabilize here then the declines we’ve seen might be all that’s needed, or something close to that.”
Wells Fargo’s Christopher Harvey said, “The consumer appears to have a ‘barbell’ approach to spending: low-end necessities and higher-end experiences/luxury items are doing fine, while general merchandise spending is being delayed, i.e., getting one more year out of that worn-down patio furniture is okay. This week, various retailers started to balance the macro narrative, with the demise of the consumer now appearing to have been greatly exaggerated,”
Tech stocks did particularly well. Autodesk jumped 10.3% off strong earnings for the recent quarter, Dell Technologies rose 12.8% off its earnings report, and chipmaker Marvell rose 6.7%. Zscaler and Datadog also jumped higher Friday, up 12.6% and 9.4%, respectively.
Jeff Kilburg, chief investment officer of Sanctuary Wealth, said the Treasury market is a “beacon of light” for investors, as the 10-year Treasury yield fell below 2.75%, off a peak of above 3% earlier this year. He went on to say, “I’m not calling it a bear rally, just a repositioning. A lot of people got too pessimistic. I go back to interest rates. When you saw Treasurys have that pop above 3%, it wasn’t sustainable. When it came under 2.75% that allowed equities to heal, that was the all-clear short term to come back into equities.”
