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U.S. stocks closed higher on Friday on strong economic data and after shaking off concerns that White House may raise the capital-gains tax for the wealthiest Americans. However, Friday’s rally couldn’t erase the weekly declines. All the three major indexes ended the day in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.7% or 227.59 points to close at 34,043.49 after recording its biggest one-day decline since Mar 4 on Thursday.
The S&P 500 added 1.1% or 45.19 points to end at 4,180.17 points. The index at one point traded higher than its Apr 16 high of 4,185.47.
Financials and materials stocks were the biggest gainers. The Financials Select Sector SPDR (XLF) gained 1.9%, while the Materials Select Sector SPDR (XLB) rose 1.6%. All the 11 sectors of the benchmark index closed in positive territory.
The fear-gauge CBOE Volatility Index (VIX) was down 7.4% to 17.33. Advancers outnumbered decliners on the NYSE by a 3.62-to-1 ratio. On Nasdaq, a 2.82-to-1 ratio favored advancing issues.
Investors Shed Fears
Markets started on a low on Friday but stocks rallied in the afternoon and the later part of the day after investors got back some confidence after indexes turning red on Thursday on reports that President Joe Biden would propose to increase the capital-gains tax on the wealthiest Americans.
On Thursday, news of Biden planning to propose a hike in capital-gains tax from 20% to 39.6% for Americans earning more than $1 million a year, hurt investors sentiments. This saw stocks taking a major hit, with all three indexes declining.
On Friday, investors reassessed the concerns that helped markets bounce back as taxable domestic investors comprise only 25% of the total U.S. stock market, while a large portion is owned in accounts that don’t account for capital gains. This large portion comprise retirement accounts, endowments and foreign investors, hence the impact on the markets won’t be much. This reassessment by investors sent stocks on a rally once again.
Economic Data
Another reason for the stocks to rally on Friday was strong economic data indicating a faster-than-expected economic recovery. IHS Markit’s manufacturing purchasing managers index (PMI) jumped to a reading of 60.5 in April from 59.1 in March. This is also the highest reading since the series started in May 2007.
In other economic data released on Friday, the Census Bureau reported that new home sales increased to a seasonally-adjusted annual rate of 1.021 million units in March, jumping 20.7% month over month.
Weekly Roundup
It was an overall turbulent week that saw choppy trading sessions. For the week, the Dow and S&P 500 closed 0.5% and 0.1% lower, respectively. The tech-heavy Nasdaq lost 0.3% for the week.
Zacks' Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.
Image: Bigstock
Stock Market News for Apr 26, 2021
U.S. stocks closed higher on Friday on strong economic data and after shaking off concerns that White House may raise the capital-gains tax for the wealthiest Americans. However, Friday’s rally couldn’t erase the weekly declines. All the three major indexes ended the day in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.7% or 227.59 points to close at 34,043.49 after recording its biggest one-day decline since Mar 4 on Thursday.
The S&P 500 added 1.1% or 45.19 points to end at 4,180.17 points. The index at one point traded higher than its Apr 16 high of 4,185.47.
Financials and materials stocks were the biggest gainers. The Financials Select Sector SPDR (XLF) gained 1.9%, while the Materials Select Sector SPDR (XLB) rose 1.6%. All the 11 sectors of the benchmark index closed in positive territory.
The tech-heavy Nasdaq rose 1.4% or 198.40 points to finish at 14,016.81 points. Shares of Apple, Inc. (AAPL - Free Report) and Microsoft Corporation (MSFT - Free Report) gained 1.8% and 1.6%, respectively. Microsoft carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The fear-gauge CBOE Volatility Index (VIX) was down 7.4% to 17.33. Advancers outnumbered decliners on the NYSE by a 3.62-to-1 ratio. On Nasdaq, a 2.82-to-1 ratio favored advancing issues.
Investors Shed Fears
Markets started on a low on Friday but stocks rallied in the afternoon and the later part of the day after investors got back some confidence after indexes turning red on Thursday on reports that President Joe Biden would propose to increase the capital-gains tax on the wealthiest Americans.
On Thursday, news of Biden planning to propose a hike in capital-gains tax from 20% to 39.6% for Americans earning more than $1 million a year, hurt investors sentiments. This saw stocks taking a major hit, with all three indexes declining.
On Friday, investors reassessed the concerns that helped markets bounce back as taxable domestic investors comprise only 25% of the total U.S. stock market, while a large portion is owned in accounts that don’t account for capital gains. This large portion comprise retirement accounts, endowments and foreign investors, hence the impact on the markets won’t be much. This reassessment by investors sent stocks on a rally once again.
Economic Data
Another reason for the stocks to rally on Friday was strong economic data indicating a faster-than-expected economic recovery. IHS Markit’s manufacturing purchasing managers index (PMI) jumped to a reading of 60.5 in April from 59.1 in March. This is also the highest reading since the series started in May 2007.
In other economic data released on Friday, the Census Bureau reported that new home sales increased to a seasonally-adjusted annual rate of 1.021 million units in March, jumping 20.7% month over month.
Weekly Roundup
It was an overall turbulent week that saw choppy trading sessions. For the week, the Dow and S&P 500 closed 0.5% and 0.1% lower, respectively. The tech-heavy Nasdaq lost 0.3% for the week.
Zacks' Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.
See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>