Market Review: S&P 500 and Dow Achieve Nine-Day Rally

U.S. stocks had another winning week, with the S&P 500 Index and Dow Jones Industrial Average extending their rallies to nine consecutive days of gains—their longest streaks in more than two decades. This week’s five-day rally was fueled by strong earnings from major tech companies, steady job gains, and the possibility of easing trade disputes, all contributing to bullish sentiment for equities.

The S&P 500 ended May 2 at 5,686, up by 2.92 percent for the week. The Dow advanced 3 percent to close at 41,317. The Nasdaq climbed 3.42 percent, ending the week at 17,977, while the Russell 2000 closed at 2,020, up by 3.22 percent.

Again, Big Tech’s shares were among the gainers. They were led higher by better-than-expected earnings from Microsoft and Meta, whose shares rose by 11 percent and 9.1 percent, respectively.

Microsoft—a provider of software, services, and hardware, including operating systems such as Windows, productivity suites such as Microsoft 365, cloud services such as Azure, and gaming consoles such as Xbox—reported solid earnings ahead of market expectations, fueled by strong performance in its cloud business.

Meta Platforms, the parent company of social media platforms, including Instagram, Messenger, and WhatsApp, also reported solid earnings, driven by robust advertising spending, shrugging off concerns about macroeconomic uncertainty.

Elsewhere in the tech sector, Apple and Amazon reported earnings that disappointed some bullish investors, though their stocks ended the week flat.

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Meanwhile, industrial conglomerate Honeywell International and Corning, an industrial materials maker, gained 7.52 percent and 3.50 percent, respectively, after beating earnings and revenue expectations, shrugging off concerns about the impact of trade disputes on the supply chain.

Among the week’s losers were fast-food chains, led by McDonald’s and Wendy’s, whose stocks dropped 1.51 percent and 1.80 percent, respectively, due to disappointing revenues and earnings.

UnitedHealthcare continued its losing streak from last week after reporting disappointing earnings.

Trade during the week was choppy, with market sentiment that swung sharply from bullish to bearish almost daily. Traders and investors were caught between positive and negative earnings headlines, mixed economic reports, and trade developments, as bulls gained the upper hand day after day.

Stocks opened higher on the morning of April 28, carrying over the positive sentiment from the previous week. However, the session quickly turned choppy, as tech stocks sold off due to profit-taking by midday, before recovering by the close on positive developments regarding tariffs.

Market volatility continued on April 29, a busy earnings reporting day, with the bulls taking the upper hand by the close of the session. Big caps were the day’s big winners, with the Dow Jones finishing in the green for the sixth consecutive day.

The tug-of-war between bulls and bears reached a climax on April 30, following news about the U.S. economy.

The gross domestic product (GDP), a measure of the nation’s output during a calendar year, contracted at an annualized rate of 0.3 percent in the first quarter.

That’s below market expectations and a sharp reversal from a 2.4 percent growth in the last quarter of 2024, marking the first decline since the first quarter of 2022.

The critical driver behind the decline in GDP was a 41.3 percent surge in imports and the cooling off in consumer spending, partially offset by a rise in fixed investment spending, the most since the second quarter of 2023.

Initially, news of a weaker economy prompted a broad sell-off as bears dominated the market. However, things turned around in the afternoon as equity analysts viewed the GDP decline as noise rather than a trend.

“Wednesday’s GDP report is backward-looking, and whether or not the economy enters into a recession or avoids one, it’s largely moot for the stock market, which is forward-looking,” Paul Stanley, chief investment officer of Granite Bay Wealth Management, told The Epoch Times via email. “Barring any significant change in the economic outlook, we believe the stock market correction of March and April was the market pricing in the slowdown in economic activity.”

By the time the closing bell rang, equity indexes had logged yet another winning session.

The turnaround gained momentum on May 1, thanks to robust earnings reported by Microsoft and Meta after the market closed the previous day.

Later on, news that China was “opening the door” to negotiations bolstered bullish sentiment and helped the stock market shake off disappointing earnings from Apple and Amazon, continuing its ascent on the morning of May 2.

The April jobs report, released that morning, further added to the positive sentiment, as the U.S. economy added 177,000 jobs—well ahead of market expectations of 130,000.

“The April jobs report may reassure investors that the labor market is holding up, giving them more confidence that the economy can hold up too,” Bret Kenwell, a U.S. investment analyst with eToro, told The Epoch Times via email.

“In the past, Fed Chair [Jerome] Powell has spoken optimistically about the labor market. With the latest jobs data and PCE report in hand, will the Fed deviate from its wait-and-see approach or provide more clarity on its macro view and approach to interest rates? That’s what investors will be looking for next week.”

The personal consumption expenditures price index (PCE)—the Federal Reserve’s preferred inflation gauge—slowed significantly in March, highlighting further signs of inflation stabilization. The Federal Open Market Committee is set to hold its policy meeting next week.