Stocks Markets Notch Second Month of Gains

Stocks Markets.- A stretch of strong earnings from some of the biggest U.S. corporations helped push the S&P 500 higher for the week, notching its second consecutive month of gains.

The S&P 500 rose Friday and clinched a 1.5% gain for April. The Dow Jones Industrial Average added 2.5% for the month, while the tech-heavy Nasdaq Composite inched up less than 0.1%.

Market volatility remained remarkably subdued for much of the month, with ebbing trading volumes and a prolonged stretch of muted moves for the major indexes.

Fireworks returned to financial Stocks Markets in the final trading sessions of the month, with First Republic shares losing almost half of their value on Tuesday and continuing a wild ride for much of the week. The bank disclosed that customers pulled about $100 billion in deposits from First Republic last month, stoking fears that the worst of the banking crisis hadn’t yet passed. On Friday, the shares dropped another 43%, bringing losses for the year to 97%.

Still, some investors said they didn’t expect the banking troubles to keep spreading, and many appeared more focused on the flurry of earnings results released throughout the week.

The S&P 500 overcame woes in the banking sector to rise 0.9% for the week. The Nasdaq added 1.3% and hit its highest closing value since September. The Dow added 0.9%.

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“The takeaway from it all is, on balance, earnings have not been as bad as expected,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

Some investors say they are in wait-and-see mode ahead of the Federal Reserve’s policy meeting next week. The central bank is expected to raise interest rates at its May meeting, and some investors have been positioning for the central bank to start trimming rates later this year. Those expectations have helped blanket the Stocks Markets with calm, sending the Cboe Volatility Index to its lowest closing level since November 2021.

The yield on the 10-year Treasury note slipped to 3.451% Friday, notching its largest two-month decline since April 2020. Jitters in some of the riskiest corners of the corporate bond market have also calmed, with the premiums that investors demand to hold junk-rated debt rather than ultrasafe Treasurys shrinking.

Regarding interest-rate expectations, KBW head of equity trading R.J. Grant said, “That’s emboldening people to feel a little bit better about buying the market.”

The week has been marked by big swings in shares of some of the biggest technology companies, which helped propel the market higher. Microsoft shares jumped 7.2% on Wednesday, its largest post-earnings move since 2015. The shares gained 7.5% for the week. Meta Platforms soared 13% for the week.

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The tech and communication services sectors within the S&P 500 led the way this week—continuing a stretch of outperformance this year—adding 2.4% and 3.8%, respectively. Areas of the market that are more sensitive to the economy, such as energy stocks, industrial companies and banks, have lagged.

Of course, there were some tech disappointments, too. Amazon shares lost 4% after its earnings, which showed cooling in the cloud-computing unit. Snap shares plunged 17% after the social-media company suffered its first quarterly sales drop.

Many investors have also been fixated on a flurry of economic data releases this week. On Friday, fresh data showed that wage growth stayed elevated to start the year and inflation remained high, keeping the Fed on track to raise rates next week.

On Thursday, data showed that economic growth slipped in the first quarter, with U.S. gross domestic product rising at an inflation-adjusted and seasonally adjusted 1.1% annual rate from January to March, a slowdown from the prior quarter.

Mr. Luschini said that some of the recent economic data has kept hopes alive for a soft landing in the U.S. economy. Though he does think there will be a recession, he doesn’t think it will be particularly deep or protracted, he said.

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Still, some earnings results flashed a warning sign about the economy. United Parcel Service shares dropped 7.9% this week after the global shipping giant said decelerating U.S. retail sales and shifting consumer behavior would reduce shipping volumes for the year. Analysts expect S&P 500 earnings to fall 3.4% for the latest quarter, an improvement from the roughly 6% decline expected at the end of last month, according to FactSet.

Don Peters, a portfolio manager at T. Rowe Price, said that he has heeded signs of slowing economic growth. “I’m positioned defensively,” Mr. Peters said.