Stocks rose Friday as Wall Street wrapped up a volatile, but winning quarter that saw more Federal Reserve rate tightening and a mini-financial panic spurred on by the collapse of Silicon Valley Bank.
The S&P 500 added 1.44% to close at 4,109.31, while the Nasdaq Composite advanced 1.74% to end at 12,221.91. The Dow Jones Industrial Average gained 415.12 points, or 1.26%, closing at 33,274.15.
The market got a boost Friday after the Fed's preferred inflation gauge showed a cooler-than-expected increase in prices. The core Personal Consumption Expenditures index, which excludes energy and food costs, rose 0.3% in February, less than the 0.4% expected by economists polled by Dow Jones.
The S&P 500 and Nasdaq were up 7.03% and 16.77%, respectively, for the first quarter. It was the best quarter since 2020 for the tech-heavy Nasdaq. The Dow ended the period with a 0.38% increase.
For the month, the S&P 500 and Nasdaq have gained 3.51% and 6.69%, respectively. The Dow, meanwhile, advanced 1.89% to end March.
But it hasn't been a smooth ride. Stocks mounted a comeback in the latter part of March after the month began with the failure of two regional banks, a forced-takeover of Credit Suisse and a flight of deposits from smaller institutions. The government's backstop of the deposits of SVB, as well as Signature Bank, and the setup of a special lending facility for other banks, helped stem the crisis.
Primary credit lending totaled $88.2 billion while banks took out $64.4 billion through the Fed's new Bank Term Funding Program, according to Fed data released Thursday that covered the period from March 22-29. That total of $152.6 billion was down slightly from $164 billion the week before and a further sign the crisis was stabilizing as the month comes to an end.
The SPDR Regional Banking ETF (KRE) closed about 1% higher on Friday, continuing its comeback from the contagion lows.
Tech stocks were the big winner this month as investors rotated out of financials. The Technology Select SPDR ETF (XLK) added roughly 10% in March.
The recent rally is "helping to confirm the market's perception that the problems that brought the market to a crisis of confidence could very well be contained," said Quincy Krosby, chief global strategist for LPL Financial.
"The semiconductors, [which] have come to be viewed as an important bellwether for global growth, delivered a strong performance," she added.
The major averages surged into Friday's close.
The S&P 500 ended the day 1.44% higher to close at 4,109.31, while the Nasdaq Composite gained 1.74% to end at 12,221.91. The Dow Jones Industrial Average jumped 415.12 points, or 1.26%, closing at 33,274.15.
The three indexes each jumped more than 3% on a weekly basis.
For the month, the S&P 500 closed 3.51% higher, while the Nasdaq added 6.69%. The Dow jumped 1.89%.
Finally, for the quarter: The S&P 500 advanced 7.03%, and the Nasdaq rallied 16.77%. The Dow inched higher by 0.38%.
-Darla Mercado
This week's ETF flows shows investors are still focused on fixed income even as stocks appear to be finding their footing.
The top two U.S. funds for flows over the past week have been the Schwab 5-10 year Corporate Bond ETF (SCHI) and the iShares 7-10 Year Treasury Bond ETF (IEF), according to FactSet. The two intermediate term bond funds pulled in about $3.8 billion combined.
On the equity side, one sector that appears to be going strong is semiconductors. The First Trust Nasdaq Semiconductor ETF (FTXL) and the VanEck Semiconductor ETF (SMH) were both in the top 15 of the week for net inflows.
—Jesse Pound
New York Federal Reserve President John Williams said Friday that the central bank is steadfast in its commitment to bring down inflation but is watching what is happening in the world of finance.
In a speech delivered in Connecticut, Williams said inflation "remains a top concern" and noted that the Fed must "use its monetary policy tools to bring inflation down."
However, he noted some of the tumult recently in the banking system and indicated he will be watching the situation closely.
"I will be particularly focused on assessing the evolution of credit conditions and their effects on the outlook for growth, employment, and inflation," he said.
—Jeff Cox
Atlantic Equities is staying bullish on Netflix, saying the company's password crackdown should be more beneficial than previously expected.
Analyst Hamilton Faber reiterated his overweight rating on the stock after analyzing its paid password sharing program, which was rolled out to more countries last month but has yet to come to the U.S. He expects to see subscriptions increase by 9% and average revenue per user go up by 3%. That combined effect is more than the 5% benefit previously anticipated.
He said that can help investors overlook the fact that advertising could take longer to scale than expected after launching its ad-supported tier launched last year. In all, Faber said he is keeping his 2025 estimates in place.
"Given the greater upside for paid sharing, we are happy to retain our 2025 estimates which are approximately 5% ahead at both the revenue and EPS lines," he said in a note to clients Friday. "We remain Overweight."
— Alex Harring
Take a look at what S&P 500 stocks made 52-week highs, including some that reached all-time highs:
— Gina Francolla
These are some of the stocks making the biggest moves midday:
— Alex Harring
Semiconductor stocks are on pace for a solid first quarter, but that could be a sign that trouble is ahead, according to Credit Suisse's Andrew Garthwaite.
"In the past month, semis have been on a tear and are now very overbought versus non-financial cyclicals," he wrote in a Friday note to clients. "When they have been this overbought in the past, they have underperformed 100% of the time over the next 3m, 6m and 9m. So might well be a warning?
On average, semis underperform by 12% within nine months after entering overbought territory, and 7.5% over the six month timespan that follows.
While the fundamentals for semis look good and the desire for artificial intelligence amid the ChatGPT craze may boost demand, he noted that the sector trades at a premium not only price-to-earnings, but also on price-to-book and price-to sales.
Even though investors have come to assume that semiconductors are entering a "super cycle of profitability," Garthwaite recommends selling these names on any strength.
Semis are "discounting a strong recovery and abnormally high profitability…be careful," he wrote.
— Samantha Subin
Bullish sentiment toward stocks over the next six months among individual investors grew a touch brighter (22.5%, up from 20.9%) in the latest survey by the American Association of Individual Investors, although it remains "unusually low" for a sixth straight week and 46th week out of the past 65. Moreover, bullishness is below the historical average of 37.5% for the 69th week out of the past 71.
Similarly, bearish opinion fell to 45.6% from 48.9% but remains "unusually high" for a fifth straight week and the 44th week in 65. Bearish sentiment is also above its historical average of 31.0% for the 66th week out of the past 71.
Neutral views on stocks were little changed at 31.9% vs 30.2% the prior week.
Sentiment surveys are contrarian indicators, with above-average optimism suggesting more risk in stocks and above-average pessimism signaling the possibility there's less risk in markets. The idea is that when bullishness is high, most investors have already bought, and when bearishness is high, most have already sold.
— Scott Schnipper
Immunology is "one of the most important growth drivers for the Major Pharma group," according to JPMorgan, which says AbbVie is the best-positioned in the space.
Analyst Chris Scott cited the company's "strong new product growth led by Skyrizi and Rinvoq, which we expect should cumulatively achieve peak sales of $28bn (surpassing Humira) and generate top-tier annual growth rates in the Pharma sector through rest of the decade." He added that the biopharmaceutical company has an attractive valuation and a dominant position in the market.
The firm reiterated its overweight rating on AbbVie shares and a price target of $190, which implies 20.3% upside from Thursday's share price. The stock has dropped 2.2% in 2023.
— Hakyung Kim
The Nasdaq 100's surged 18.5% so far this quarter, putting the index on track for its best quarter since the second quarter of 2020.
Tech stocks made a comeback to start 2023 after the toughest year for the sector since 2008 as investors dipped back into the growth area.
Nvidia's leading the index's rebound. Shares have been on a tear this year, up a whopping 87.4% as investors make a bet on its artificial intelligence capabilities. As of Thursday's close, it's the best-performing stock in the Nasdaq 100.
Many of this quarter's top performers include a slew of last year's most beaten up names.
That includes Meta Platforms and Tesla, up 72.7% and 58.5%, respectively. Orthodontics company Align Technology is another name bucking last year's downtrend, along with Warner Bros. Discovery, up about 57% so far this year.
Other top gainers this quarter include Advanced Micro Devices, and travel stock Airbnb.
— Samantha Subin
BTIG downgraded shares of Nikola to neutral from a buy rating as the company announced a $100 million stock offering priced at 20% below is Thursday closing price.
"Cash injection provides near-term liquidity boost but more work to do," wrote analyst Gregory Lewis in a Friday note.
Even with improving demand for the company's fuel-cell-powered trucks, Lewis added that he expects deliveries to come in below the Nikola's 2023 target as it faces challenges around bringing the vehicle to market.
Lewis also views an accelerated relocation of its battery manufacturing from California to Arizona as a near-term margin pressure that should subside overtime.
He noted that "bringing battery production in house should help bring the incremental $100k/Tre costs from batteries down over time as automation efforts progress."
Despite these concerns, Lewis still views the company as an "early mover" that he expects to gain urban market share over the near term.
The company's hydrogen business should also provide a medium-term to long-term growth catalyst, he added.
Shares sank about 13% on Friday.
— Samantha Subin
A nearly 2% Friday advance has helped the Women CEO ETF (WCEO) get on track to post its best weekly return since it was created in mid January.
The ETF, which only invests in women-led companies, is up 4% so far this week. Its next best performing week was the one ending Feb. 3, when the fund finished 3.6% higher.
Despite the rally, the ETF is more than $2 off its high seen in early February.
— Gina Francolla, Alex Harring
The University of Michigan's consumer sentiment index fell in March to 62 from 67 in February. Economists polled by Dow Jones expected a decline to 63.
This marks the first time in four months that consumer sentiment has declined, said Surveys of Consumers Director Joanne Hsu.
"This month's turmoil in the banking sector had limited impact on consumer sentiment, which was already exhibiting downward momentum prior to the collapse of Silicon Valley Bank," Hsu said. "Overall, our data revealed multiple signs that consumers increasingly expect a recession ahead. While sentiment fell across all demographic groups, the declines were sharpest for lower-income, less-educated, and younger consumers, as well as consumers with the top tercile of stock holdings."
Inflation expectations for the year ahead also fell to 3.6% from 4.1%.
— Fred Imbert
Gold is on pace to post a monthly price gain that hasn't been seen in more than two years.
With just Friday's session left in the March trading month, gold is on pace to finish 9% higher. That would be its best monthly performance since July 2020, when the metal rallied 10.3%
If a Friday selloff pushes its monthly advance below 7.8%, March would instead become the metal's best month since May 2021.
Gold prices were steady early Friday.
— Alex Harring, Gina Francolla
Loop Capital analyst Rob Sanderson downgraded JD.com shares to hold from buy, citing rising competition from Tencent that he expects will weigh on the stock.
"We continue to believe the company is undervalued and see potential for meaningful upside over the long-term, but no longer see conditions for valuation unlock in the near-term," Sanderson wrote in a Thursday note.
"Our change of opinion is largely driven by two factors: (1) the company's decision to clean-up certain product categories (3-5% revenue headwind) will appear as share loss amidst increasing competitive concerns and (2) historic partner and investor Tencent is moving down-funnel to directly enable ecommerce transactions, further elevating competitive concern."
— Sarah Min
The S&P 500 and Nasdaq Composite rose 0.3% and 0.2%, respectively at the open, while the Dow popped more than 100 points.
— Fred Imbert
Morgan Stanley analyst Dara Mohsenian reiterated an overweight rating on elf Beauty, and raised his price target, saying the cosmetics stock can jump 19%.
"We are reiterating our OW on ELF as our preferred SMID cap name, with increased confidence behind our call for large topline upside vs consensus, supported by accelerating Q1 US scanner data sales which confirms near-term upside and greater LT growth opportunity than the market expects," Mohsenian wrote to clients in a Thursday note.
— Sarah Min
Futures got a boost after an inflation gauge followed by the Federal Reserve came in lighter than expected. The personal consumption expenditures price index excluding food and energy increased 0.3% for the month, the Commerce Department reported Friday. That was below the 0.4% Dow Jones estimate and lower than the January increase.
-John Melloy, Jeff Cox
Emergency borrowing at the Federal Reserve's discount window fall last week, raising some hope that the banking crisis could be receding.
Primary credit lending totaled $88.2 billion while banks took out $64.4 billion through the Fed's new Bank Term Funding Program, according to Fed data released Thursday that covered the period from March 22-29.
That total of $152.6 billion was down slightly from $164 billion the week before. The Fed instituted the BTFP and relaxed rules on the discount window following the implosion of Silicon Valley Bank and Signature Bank in early March.
Banks generally don't like the use the discount window as it signals that they are under stress and can't raise capital in the private marketplace.
—Jeff Cox
Morgan Stanley analyst Andrew Ruben reiterated MercadoLibre as overweight and named it a top pick, saying the Latin American e-commerce and payments company has "multiple sources for earnings upside."
"With new EBIT-level builds for eight MELI business lines, we see a durable base of profitable growth drivers," Ruben wrote. The analyst's price target also implies upside of nearly 40%.
— Sarah Min