S&P 500, Nasdaq on course for best month since 2020 despite Middle East risks

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By Niket Nishant and Utkarsh Hathi

April 30 (Reuters) – The S&P 500 and the Nasdaq were on course to end April with their biggest gains since 2020, highlighting how resilient corporate earnings have helped steady investor nerves despite a historic supply shock in the oil markets.

The rally shows that investors are leaning heavily on earnings resilience to look past geopolitical turmoil, which means there’s a higher risk of a quick tumble if companies begin to signal that war-driven costs are squeezing growth.

“There’s this big tug of war, but the earnings side is winning so far. Market is trying to look through the near-term uncertainty, but of course, the longer it lasts, the more acute the pressures are,” said Angelo Kourkafas, senior global investment strategist at Edward Jones.

At 11:54 a.m. ET on Thursday, the Dow Jones Industrial Average rose 686.88 points, or 1.41%, to 49,548.69, the S&P 500 gained 33.56 points, or 0.48%, to 7,169.99 and the Nasdaq Composite advanced 37.67 points, or 0.15%, to 24,710.91.

The S&P 500 was headed for its biggest monthly gain since November 2020, the Nasdaq was on pace for its best month since April 2020 and the blue-chip Dow cruised toward its strongest month since November 2024.

GDP GROWS WHILE PRICE PRESSURES PERSIST

Data released on Thursday showed that U.S. economic growth picked up in the first quarter due to a rebound in government spending, but the increase is likely temporary as the war with Iran drives up gasoline prices and squeezes household budgets.

U.S. inflation accelerated in March, in line with economists’ expectations. Excluding ⁠the volatile food and energy components, the core PCE inflation — the Fed’s preferred gauge — advanced 3.2% in the 12 months through March, compared to the central bank’s 2% target.

“This reinforces the Fed’s decision to leave rates unchanged yesterday, and further corroborates the three dissenters view towards removing the easing bias in the Fed’s recent statement,” said Art Hogan, chief market strategist at B. Riley Wealth.

An “easing bias” is a signal that the Fed’s 19 monetary policymakers are leaning more toward a rate cut than a rate hike.

Regional reserve bank presidents Beth Hammack of Cleveland, Lorie Logan of Dallas and Neel Kashkari of Minneapolis had signaled that inflation was too high to signal an easing bias.

TECH EARNINGS STRONG BUT SPENDING PLANS WEIGH

Big Tech earnings were largely strong, with shares of Google parent Alphabet rising 7.2% to hit a fresh high following a record quarter for its cloud unit.

However, Meta Platforms and Microsoft fell 9% and 5%, respectively, a day after they laid out their capital spending plans, while Amazon dipped 2% following results, despite exceeding cloud sales expectations.

Nine of the 11 main S&P 500 sectors were in the green. Industrials led gains, with a 2.4% rise.

Brent crude futures hit their highest in nearly four years on fears of a protracted disruption in oil markets, after an Axios report said President Donald Trump was slated to receive a briefing from the leader of the U.S. Central Command on new plans for potential military action against Iran.

While they retreated from their peaks, oil prices remain elevated at around $110 a barrel.

Renewed escalation would undermine weeks of optimism over diplomatic efforts to resolve the U.S.-Iran war that has buoyed the market.

Among other stocks, Eli Lilly gained 9.6% after the drugmaker lifted its annual profit forecast on sustained weight-loss drug demand.

Caterpillar shares rose 10.1% to reach a record high after the construction and mining equipment maker reported higher first-quarter profit.

Advancing issues outnumbered decliners by a 3.33-to-1 ratio on the NYSE and by a 2.44-to-1 ratio on the Nasdaq.

The S&P 500 posted 25 new 52-week highs and 14 new lows, while the Nasdaq Composite recorded 79 new highs and 81 new lows.

(Reporting by Niket Nishant and Utkarsh Hathi in Bengaluru; Editing by Devika Syamnath and Shinjini Ganguli)