- US stocks ended the volatile week slightly higher after earnings from Apple helped investors overcome fears of a hawkish Fed.
- Corporate earnings from Apple, Microsoft, and Visa were ahead of estimates and led to big share gains.
- Strong economic growth in 2021 has been met with the highest inflation in decades, according to recent data.
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US stocks jumped on Friday, with the Nasdaq 100 surging more than 3% as a wave of corporate earnings results helped investors overcome fears of a hawkish Fed.
Friday's action helped the broader stock market indices end the week mostly flat after a series of volatile trading sessions sparked by the Federal Reserve's Wednesday meeting. The Dow Jones Industrial Average recorded a swing of 1,100 points on Monday alone.
Apple reported a record first-quarter revenue of $124 billion and said it expects solid year-over-year growth in 2022 as it continues to navigate supply chain disruptions. Shares of Apple surged 7%. Visa also reported strong earnings, leading to a 10% stock surge on Friday. Trading app Robinhood reported earnings that misses expectations, leading the stock to fall as much as 13% to a post-IPO low before eventually ending the day higher by about 8%.
Of the 31% of S&P 500 companies that have reported earnings so far, 81% are beating profit estimates by a median of 6%, while 75% are beating revenue estimates by a median of 4%, according to data from Fundstrat.
Here's where US indexes stood at the 4:00 p.m. ET close on Friday:
- S&P 500: 4,431.88, up 2.44%
- Dow Jones Industrial Average: 34,725.47, up 1.65% (564.69 points)
- Nasdaq Composite: 13,770.57, up 3.13%
On top of corporate earnings, investors are questioning how recent economic data will impact the Federal Reserve's decision to raise interest rates and reduce its balance sheet. The economic data suggest the Fed will follow through with interest rate hikes beginning in March.
The US economy grew 5.7% in 2021, as measured by GDP, which was the fastest growth since 1984. But that growth has also led to rising inflation, with the personal consumption expenditures index up 5.8% in December, representing the fastest pace since 1982.
The surge in economic growth has led investors to reassess the growth and value trade over the past year. This has led to a convergence in performance between Berkshire Hathaway and Cathie Wood's Ark Invest, as disruptive innovation continues to sell-off amid rising interest rates.
Cathie Wood found value in Tesla's Thursday decline of about 12%, with Ark Invest buying Tesla shares for the first time in eight months. Two ARK ETFs bought a combined $30 million of Tesla.
Fidelity is set to launch two new ETFs to track the metaverse and the cryptocurrency sector, according to recent filings with the SEC. The launch of a new ETF sporting the symbol "PUNK" is also seeking to invest in the metaverse, but it's excluding Meta Platforms, formerly known as Facebook, and is actively shorting it.
West Texas Intermediate crude oil rose as much as 1.97% to $88.32 per barrel. Brent crude, oil's international benchmark, jumped as much as 1.99% to $91.12 per barrel.
Gold fell as much as 0.52% to $1,783.80 per ounce. The yield on the 10-year Treasury rose less than 1 basis point to 1.83%.