U.S. Stocks Show Strong Move Back To The Upside But Close Lower For The Week

After coming under pressure over the course of the previous session, stocks showed a strong move back to the upside during trading on Friday. The major averages all moved to the upside on the day, although the Dow underperformed its counterparts.

The major averages pulled back off their highs going into the close but remained firmly positive. The Dow climbed 227.59 points or 0.7 percent to 34,043.49, while the Nasdaq surged up 198.40 points or 1.4 percent to 14,016.81 and the S&P 500 jumped 45.19 points or 1.1 percent to 4,180.17.

Despite the advance on the day, the major averages closed modestly lower for the week. The Dow slid by 0.5 percent, the Nasdaq fell by 0.3 percent and the S&P 500 edged down by 0.1 percent.

The rebound on Wall Street partly reflected the volatility seen over the past few sessions, which saw the major averages show big swings back-and-forth.

After coming under pressure early in the week, stocks showed a strong move back to the upside during trading on Wednesday.

Stocks subsequently experienced choppy trading early on Thursday before pulling back sharply on reports of President Joe Biden’s plans to raise capital gains tax rates.

The major averages slid back toward the lower end of a recent trading range, potentially leading to the renewed buying interest seen in today’s trading.

Optimism about the economic recovery has helped prop up the markets, although concerns about high valuations and surging coronavirus cases overseas have led to worries about the near-term outlook.

The Dow underperformed the broader Nasdaq and S&P 500 due in part to a steep drop by shares of Intel (INTC), with the semiconductor giant tumbling by 5.3 percent.

The decline by Intel comes after the company reported better than expected first quarter results but provided guidance below analyst estimates.

Dow components American Express (AXP) and Honeywell (HON) also moved to the downside despite reporting better than expected quarterly earnings.

In U.S. economic news, the Commerce Department released a report showing a substantial rebound in new home sales in the month of March.

The report showed new home sales skyrocketed by 20.7 percent to an annual rate of 1.021 million in March after plunging by 16.2 percent to a revised rate of 846,000 in February.

Economists had expected new home sales to spike by 14.3 percent to a rate of 886,000 from the 775,000 originally reported for the previous month.

With the rebound, new home sales soared from the eight-month low set in February to their highest level since August of 2006.

Sector News

Airline stocks moved sharply higher on the day, with the NYSE Arca Airline Index soaring by 3.4 percent. The index continues to rebound after falling a nearly two-month closing low on Tuesday.

Significant strength was also visible among banking stocks, as reflected by the 2.9 percent spike by the KBW Bank Index.

Computer hardware stocks also saw considerable strength on the day, driving the NYSE Arca Computer Hardware Index up by 2.7 percent to a record closing high.

Brokerage, steel and semiconductor stocks also showed strong moves to the upside, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index slid by 0.6 percent, while China’s Shanghai Composite Index rose by 0.3 percent.

Meanwhile, European stocks climbed off their worst levels of the day but still closed mostly lower. While the U.K.’s FTSE 100 Index closed nearly unchanged, the French CAC 40 Index dipped by 0.2 percent and the German DAX Index fell by 0.3 percent.

In the bond market, treasuries once again showed a lack of direction before ending the day in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inch up by 1.3 basis points to 1.567 percent.

Looking Ahead

The Federal Reserve’s monetary policy announcement is likely to be in the spotlight next week, although the central bank is widely expected to maintain its ultra-easy monetary policy.

Traders are likely to pay close attention to any changes to the Fed’s statement that may signal a shift in policy in the near future.

Reports on durable goods orders, consumer confidence and personal income and spending may also attract attention along with the preliminary reading on first quarter GDP.

On the earnings front, Tesla (TSLA), General Electric (GE), UPS (UPS), Alphabet (GOOGL), Microsoft (MSFT), Boeing (BA), Apple (AAPL), McDonald’s (MCD), Amazon (AMZN), and Exxon Mobil (XOM) are just some of the big-name companies due to report their quarterly results next week.