Stocks climb on Wall Street; S&P 500 on pace for weekly gain

NEW YORK — U.S. stocks are ticking higher Friday, erasing the market’s losses from earlier in the week and setting Wall Street up to avoid a second straight weekly drop.

The S&P 500 was up 0.3% in afternoon trading, and some of the biggest gains came from companies whose profits are likely to jump the most if COVID-19 vaccinations and massive spending by the U.S. government juice the economy as much as economists expect. The index is on track for a 0.2% rise this week following last week’s 0.8% dip.

The Dow Jones Industrial Average was up 86 points, or 0.3%, at 32,700, as of 2:15 p.m. Eastern time. The Nasdaq composite was 0.6% lower after giving up a gain from earlier in the day.

Stock prices have been largely churning in place during recent weeks with momentum often shifting sharply, sometimes by the hour. Rising expectations for a supercharged economic recovery are supporting many stocks on one hand, while worries about the possibility of higher inflation and rising interest rates are undercutting the market on the other.

“It’s natural that you would have people looking at” stocks of companies that would benefit the most from a rejuvenated economy, said Tom Plumb, portfolio manager and president of Plumb Funds. “But there are times when you are going to have a fair amount of volatility because a recovery like we are in has never been smooth.”

Much of the stock market‘s recent turbulence has been an after-effect of movements in the bond market, where Treasury yields have been largely climbing since last autumn. Higher yields can make investors less willing to pay high prices for stocks, with the most pain hitting companies seen as the most expensive or asking their investors to wait many years for the payoff of big profit growth.

The yield on the 10-year Treasury rose to 1.66% from 1.61% late Thursday. But that’s still below last week, when it rose above 1.70% and touched its highest level since before the pandemic began.

A report on Friday also showed that a gauge of inflation that the Federal Reserve likes to use was weaker last month than economists expected. That took off some of the pressure of inflation worries in the near term.

The higher yields helped lift stocks of banks, in part because higher interest rates allow them to make bigger profits from making loans. Financial stocks also got a boost after the Federal Reserve said it will soon allow banks to resume buying back their own stock and to send bigger dividend payments to shareholders. The Fed restricted such moves last summer to force banks to hold onto cash cushions amid the coronavirus-caused recession.

Some of Friday’s biggest gains came from energy stocks, which benefited from a 4.5% rise in the price of U.S. oil. Brent crude, the international standard, rose 4.4% to $64.53 per barrel.

Marathon Oil gained 3%, and energy stocks across the S&P 500 rose 1.4%.

Stocks of companies that would benefit from more investment in infrastructure were also rallying sharply. Steelmaker Nucor climbed 6.9% for the biggest gain in the S&P 500, and miner Freeport-McMoRan rose 3.8%.

President Joe Biden is pushing for big spending on the nation’s infrastructure, as many past presidents have done to little effect. “Whether or not it happens or doesn’t happen, the market feels like there’s more of a possibility that it will happen,” Plumb said.

Other companies that stand to benefit from more widespread coroanvirus vaccinations and the U.S. government’s spending plan to rescue the economy were also particularly strong. Victoria’s Secret and Bath & Body Works owner L Brands gained 4% after raising its profit forecast for the frist quarter, citing higher sales as stimulus checks reach people and COVID-19 restrictions are relaxed.

Since interest rates began rising last autumn, tech stocks have been most caught within the the market’s crosswinds. They were among the biggest winners earlier in the pandemic, and their high stock prices and long runways of profit growth have made them susceptible to weakness when interest rates have been on the rise.

Such high-growth stocks were turning in a mixed performance on Friday. Amazon and Google’s parent company were both down at least 0.7%, while Tesla sank 5.1%. Microsoft and Facebook were both up at least 1%, while Apple flipped several times between gains and losses.

Stocks also rose across most international markets. Indexes rallied 1% or more from London to Seoul.