US stocks rebounded on Friday, breaking a four-day losing streak, as investors found value in beaten-down regional banks and Apple shares saw sharp gains. Despite the day’s recovery, the S&P 500 and Dow still experienced their largest weekly pullback since the week ended March 10, with reductions of 0.8% and 1.2% respectively. However, the Nasdaq Composite managed a marginal weekly gain of 0.1%.
The upturn in the markets was primarily driven by a significant rebound for the banking sector, boosted by investors picking up shares at bargain prices. The KBW Regional Banking Index surged by 4.8%, while the KBW Nasdaq Bank index was up by 4.6%. Several financial stocks saw double-digit returns on Friday, with notable gains for SVB Financial Group, Commerce Bancshares, and Signature Bank, increasing by 11.3%, 10.5%, and 10.5% respectively.
Another significant contributing factor to the uplift was the increase in the shares of Apple Inc., which rose by 3.9%. This change in fortune eased some concerns among investors that the company’s recent pricing struggles might be indicative of broader issues within the stock market.
On Friday, the S&P 500 gained 75 points, or 1.9%, closing at 4,136.25. The Dow Jones Industrial Average advanced by 475 points, or 1.4%, finishing at 34,657.83. Meanwhile, the Nasdaq lifted by 179 points, or 1.3%, ending up at 13,546.15. The resurgence was a welcome change after consecutive losses for the major indexes, although the overall weekly performance was still lackluster.
The markets had been struggling throughout the week due to concerns of rising inflation and the potential impact on Federal Reserve policy. US consumer prices experienced a significant jump in April, which further exacerbated investor fears about the possibility of the central bank tightening monetary policy sooner than anticipated.
Despite the weak performance of the greenback, the US dollar lost ground against the Mexican peso, Australian dollar, and Canadian dollar. Combined with disappointing US retail sales figures and a general increase in risk appetite from investors, the weakness in the US dollar likely encouraged the buying of riskier assets on Friday.
In corporate news, Boeing Co.’s 737 MAX jetliner remains under scrutiny following an electrical grounding issue affecting over 100 aircraft. The company is now testing repairs for the problem and has resumed production, although the financial impact on the manufacturing giant is expected to linger.
Shares of Honeywell International Inc. fell 1.4% after the company revealed it had received a subpoena from the US Department of Justice related to an investigation into asbestos claims. The news prompted speculation about the nature of the alleged violations and the potential financial consequences for the company.
The Walt Disney Co.’s shares also slid 2.6% after the media conglomerate reported lower earnings than forecast, partly due to slower subscriber growth for its Disney+ streaming platform.
Meanwhile, the price of oil rose on the back of a spate of positive global economic data and a weekly decline in US inventories. Brent crude futures increased by $1.68 to settle at $69.02 a barrel, while US West Texas Intermediate advanced $1.50 to close at $68.40 a barrel. This upward trajectory was further boosted by the news that Iran’s high-level nuclear talks with world powers may take longer than expected to reach a deal.
The yield on the 10-year Treasury note increased 5.5 basis points to close at 1.605%, while gold prices edged down as the USD lost steam.
As the week ended, the markets seemed to show resilience amid concerns about higher inflation and potential shifts in central bank policy. Investors appeared to regain their appetite for riskier assets as uncertainty over the future trajectory of the economy persisted. However, despite the gains made on Friday, the week was marred by losses, and few would argue that the near-term outlook remains challenging as investors grapple with a broader range of economic data and significant global events that are shaping the trajectory of markets around the world.
