The S&P 500 index and the Dow Jones Industrial Average rose on Friday to close at record highs, getting their lift from growth stocks and optimism ahead of quarterly earnings season next week. Meanwhile, data showed U.S. producer prices increased more than expected in March, bringing the largest annual gain in 9-1/2 years.
Cash Market Performance
In the cash market, the benchmark S&P 500 Index settled at 4128.80, up 31.63 or +0.77%, the blue chip Dow Jones Industrial Average finished at 33800.60, up 297.03 or +0.88% and the technology-based NASDAQ Composite closed at 13900.19, up 70.88 or +0.51%.
Growth Stocks Moved Back to Forefront
Growth names have found their footing over the past two weeks after being outperformed by value stocks for most of the year. A pullback in the 10-year U.S. Treasury yield from a 14-month high hit in late March encouraged buying in growth.
The Russell 1000 growth index, made up largely of technology stocks, outperformed its value counterpart, made up mostly of cyclical stocks such as financials and energy names, for a second week following the pullback in longer-dated Treasury yields.
US Factory Gate Prices Surge
On the data front, the producer price index, which measures wholesale price inflation, jumped in March. The March PPI data showed a rise of 1.0%, compared with a projected increase of 0.4% from economists surveyed by Dow Jones.
Year over year, the PPI surged 4.2%, which marks the largest annual gain in more than nine years.
Many investors now expect higher inflation as vaccine rollouts help the U.S. economy rebound from coronavirus-fueled lockdowns, yet stocks showed little concern as the Federal Reserve has maintained it will allow inflation to overshoot its target.
Stocks in the News
Stocks linked to the recovering economy led the gains again amid the accelerating vaccine rollout. Carnival Corp rose 2.6% after getting two upgrades on Wall Street amid pent-up demand and potential summer restart. General Electric climbed more than 1%. JP Morgan added 0.8%.
Gains in Honeywell helped lift the Dow as Jefferies and J.P. Morgan raised their price targets on the U.S. aero parts maker’s shares.
Earnings Season Begins Next Wednesday
The banks will kick off first-quarter earnings season this week with Goldman Sachs, JPMorgan and Wells Fargo scheduled to report on Wednesday. Analysts expect profits for S&P 500 firms to show a 25% jump from a year earlier.