S&P 500, Nasdaq rally to fresh highs as earnings-heavy week draws to a close

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By Niket Nishant and Utkarsh Hathi

May 1 (Reuters) – The benchmark S&P 500 and the Nasdaq Composite touched record highs on Friday and were on course for their longest weekly winning streaks since 2024 as strong corporate earnings helped investors look past inflation risks.

Sentiment was boosted after a report from Iranian state media said Tehran had sent its latest proposal for negotiations with the United States to Pakistani mediators on Thursday.

Friday’s session wraps up a heavy week of Big Tech earnings and economic data. Analysts now see S&P 500 first-quarter earnings growth at 27.8% – the fastest pace since the fourth quarter of 2021 and up from 16.1% last week, according to LSEG IBES data.

Markets will wait to see if the rally holds in May, historically the start of a weaker six-month stretch for stocks.

Since 1945 through April 2026, the S&P 500 has gained an average of about 2% from May to October, according to data from Fidelity. That compares with an average gain of about 7% from November through April.

However, the May-to-October period has seen more solid returns in the last decade, suggesting the strategy to “sell in May and go away” is not without risks.

CONCERN OVER AI SPENDING PLANS

Economic data released this week raised fears the equity buying frenzy was due for a reality check.

Although U.S. economic growth regained momentum in the first quarter, consumer spending, the economy’s main growth engine, decelerated, while the personal savings rate declined, suggesting households tapped into savings to support outlays.

“If we see persistently high oil prices for a prolonged period of time, that will increase transportation costs and the cost of manufacturing goods, which will cascade into higher prices overall,” said Devin Cattelan, portfolio manager at Verecan Capital Management.

U.S. manufacturing activity was steady in April, but supplier delivery performance worsened as the Middle East conflict disrupted shipping in the Strait of Hormuz, boosting prices for raw materials and other inputs to a four-year high.

Adding to the unease, U.S. President Donald Trump said he would increase tariffs on cars and trucks from the European Union to 25%, saying the EU had not complied with its trade deal.

At 12:17 p.m. ET, the Dow Jones Industrial Average was flat, the S&P 500 rose 42.15 points, or 0.58%, to 7,251.16, and the Nasdaq Composite gained 266.35 points, or 1.07%, to 25,158.67.

Six of the 11 main S&P sectors were in the green, with the S&P 500 information technology sector gaining the most with a 1.6% rise.

The S&P 500 ended April with its biggest monthly percentage gain since November 2020, while the Nasdaq Composite advanced the most since April 2020. The Dow’s monthly rise was its biggest since November 2024.

Apple jumped 4.8% after robust demand for its flagship iPhone 17 and MacBook Neo led the company to forecast solid sales growth for the fiscal third quarter.

Software companies climbed after Atlassian lifted its annual forecast. The enterprise software maker surged 22.6%.

Peers Salesforce and ServiceNow added 3.2% and 2.3%, respectively. Datadog rose 6.4% and Workday gained 3.1%.

Other major movers included Roblox, which fell 17.5% following a cut in its annual bookings forecast. Reddit gained 12.7% after an upbeat quarterly revenue forecast.

Advancing issues outnumbered decliners by a 1.42-to-1 ratio on the NYSE and by a 1.73-to-1 ratio on the Nasdaq.

The S&P 500 posted 42 new 52-week highs and eight new lows, while the Nasdaq Composite recorded 116 new highs and 37 new lows.

(Reporting by Niket Nishant and Utkarsh Hathi in Bengaluru; Editing by Devika Syamnath and Pooja Desai)