Stocks rose on Friday, logging a second straight day of increases but still posting weekly declines after steep drops earlier this week.
The Dow gained more than 350 points, or 1%, after the index posted its best single-session gain since March on Thursday. The Nasdaq outperformed with a rally of more than 2%, led by a rebound in technology stocks. The S&P 500 gained 1.5%.
Shares of Disney (DIS) slid after the company posted quarterly revenue that missed estimates, with subscribers to Disney+ falling short of Wall Street’s expectations and the firm’s theme parks division losing money for a fourth straight quarter. Coinbase (COIN) shares declined even after the crypto exchange boosted its full-year outlook, and as cryptocurrencies including Bitcoin and Ethereum recovered losses from earlier this week. Home rental company Airbnb (ABNB) topped first-quarter sales estimates but posted a wider-than-expected quarterly loss, though shares ended the session higher.
Investors this week have been nervously eyeing signs of inflation in the economic recovery coming out of the pandemic. Both consumer and producer prices surged in April over last year, reflecting both an inevitable bounce off last year’s virus-depressed levels as well as upward price pressures as demand across supply chains outstripped supply. Consumer prices surged by a faster than expected 4.2% year-over-year last month, government data showed earlier this week. And producer prices also came in higher than expected, with core producer prices rising 4.1% last month versus the 3.8% increase expected.
However, signs that fewer workers were leaving the job market at least temporarily helped assuage market participants’ fears over labor supply shortages on Thursday. New weekly jobless claims fell to a pandemic-era low last week, dipping below 500,000 for the first time since March 2020.
A new print on retail sales from the Commerce Department on Friday gave the latest update on consumer demand. Retail sales were flat month-on-month in April, down from the revised 10.7% increase reported during the prior month, with some pay-back occurring after stimulus checks boosted March’s spending.
Altogether, investors are weighing whether the strength of the post-COVID economic recovery will in fact spur an overheating of the economy – and if that becomes the case, when the Federal Reserve will ultimately choose to step in.
“I think the big problem for investors right now is the Fed isn’t going to change its course any time soon. But a lot of people who do have inflation fears longer-term are going to look for a shift in monetary policy that won’t take place,” George Ball, Sanders Morris Harris CEO, told Yahoo Finance on Thursday. “And so while people wait and wait and wait, those fears will become greater. And I think ultimately they tug prices down, although not yet. We of the investing class like to see prices going higher, and there is momentum still in the market that is still on the bull side, at least temporarily, than on the downside.”