Stocks traded higher Friday, lifted by data indicating an acceleration in private-sector economic activity and another round of red-hot new home sales, after markets dipped Thursday on reports President Joe Biden would propose a large increase on the capital-gains tax for the wealthiest Americans.
A busy week of corporate earnings reports is also coming to a close.
What are major benchmarks doing?
- The Dow Jones Industrial Average DJIA, +0.67% erased a modest early decline to rise 192 points, or 0.6%, to recapture the key 34,000 threshold, at 34,006.
- The S&P 500 SPX, +1.09% was up 42 points, or 1%, near 4,177.
- The Nasdaq Composite COMP, +1.40% jumped 184 points, or 1.3%, to 14,003.
On Thursday, the Dow tumbled 321.40 points, or 0.9%, for its biggest one-day fall since March 4, while the S&P 500 and Nasdaq Composite also fell 0.9%. All three benchmarks are still on track for weekly declines.
What’s driving the market?
Stocks are seeing some recovery Friday, with all major sectors in the S&P 500 advancing, after the indexes turned south Thursday when Bloomberg News and others reported that Biden would propose a hike in the capital-gains tax rate to 39.6% from 20% for individuals making more than $1 million a year. While the reports dented sentiment, analysts noted that the proposal was in line with Biden’s campaign promises and predicted a hike would be scaled back in congressional negotiations.
“The 39.6% figure is very much in line with the campaign pledge and shouldn’t shock, but the fact we’ve seen selling of risk suggests the market is far more sensitive to bad news, and this will happen when froth is prevalent,” said Chris Weston, head of research at Pepperstone, in a note. “Consolidation seems to the order here in the short-term and it feels like we’re at the mercy of a period of choppy price action,” he said.
In U.S. economic data, the IHS Markit purchasing managers index for the manufacturing sector rose to a record 60.5 in April from 59.1 a month earlier, while the services sector PMI jumped to 63.1 from 60.4. A reading of more than 50 indicates an expansion in activity.
New home sales rose to a seasonally-adjusted annual rate of 1.021 million in March, the U.S. Census Bureau reported — the fastest pace since 2006. Month-over-month, sales rose 20.7%. Also, the Census Bureau revised the sales figure for February up to a rate of 846,000, from the originally reported rate of 775,000.
Which companies are in focus?
- Intel Corp. INTC, -5.79% shares were down nearly 6%, despite a big earnings beat and raised annual guidance, as a large dip in data-center sales was offset by strength in sales of personal computers and a departing memory business.
- Shares of Snap Inc. SNAP, +1.00% rose 1.9% after the social-media company posted first-quarter results that surpassed analyst estimates.
- Mattel Inc. MAT, -0.38% shares were up 0.7% after the toy maker reported a narrower-than-expected quarterly loss and said its sales surged nearly 50%.
- Boston Beer Co. SAM, +0.60%, known for its Sam Adams-branded beers, reported earnings late Thursday that soared past analyst expectations, buoyed in part by sales of hard seltzers. Shares were up 0.9%.
- Shares of Dow component Honeywell International Inc. HON, -2.19% were off 2.3% after beating Wall Street estimates for earnings and revenues and revising its 2021 outlook.
- Schlumberger Ltd. SLB, +1.35% shares rose 1.2% after the energy-services giant posted better-than-expected earnings for the first quarter.
- Shares of American Express Co. AXP, -2.00% fell 2% after the card company’s first-quarter revenue fell short of expectations.
- Kimberly-Clark Corp. KMB, -5.71% stock fell 5.6% after the consumer products company, whose brands include Kleenex, Huggies, Scott and Depends, reported first-quarter profit and sales that came in below expectations, and lowered its full-year outlook.
What are other markets doing?
- The yield on the 10-year Treasury note BX:TMUBMUSD10Y rose nearly 2 basis points to 1.561%. Yields and bond prices move in opposite directions.
- The ICE U.S. Dollar Index DXY, -0.35%, a measure of the currency against a basket of six major rivals, fell 0.4% to 91.00.
- Bitcoin BTCUSD, -3.74% fell 4.1% in a move that some observers tied to tax jitters, with the digital asset falling below $50,000.
- Oil futures moved higher in choppy trade, with the U.S. benchmark CL00, +0.77% up 0.7% or 42 cents at $61.85 a barrel.
- Gold futures gave up modest early gains to trade lower, with the June contract GCM21, -0.30% down 0.3% at $1,776.70 an ounce.
- In Europe, the Stoxx 600 index SXXP, -0.13% slipped 0.1% and London’s FTSE 100 UKX, +0.00% was flat.
- In Asia, the Shanghai Composite SHCOMP, +0.26% rose 0.3%, Hong Kong’s Hang Seng Index HSI, +1.12% jumped 1.1% and Japan’s Nikkei 225 NIK, -0.57% fell 0.6%.