By Joe Wallace
U.S. stocks inched higher and toward records amid another volley of blue-chip earnings and more signs of economic growth.
The Dow Jones Industrial Average rose 0.4%, its third straight day of gains and one day after it hit 34000 for the first time. The S&P 500 rose 0.2% after posting its 22nd all-time closing high of 2021 on Thursday. The Nasdaq Composite bucked the trend, down less than 0.1%. All three indexes are on track for weekly gains of about 1%.
A strong start to earnings season from banks and other financial companies has combined with data showing the economy is growing at a rapid clip to propel stocks higher this week. Adding to the momentum: A drop in yields on U.S. government bonds that has surprised some investors in its size and speed.
Shares of Morgan Stanley fell 0.9% even after the investment bank said profit more than doubled in the first quarter, becoming the latest Wall Street firm to report a blowout start to the year. Citizens Financial Group, Bank of New York Mellon, PNC Financial Services Group and custodian and fund manager State Street also posted quarterly results.
Data out Friday showing the Chinese economy grew at a record rate of 18.3% in the first quarter will add to optimism about the U.S.'s economic prospects, said Remi Olu-Pitan, multiasset fund manager at U.K. investment firm Schroders.
"Maybe we should notch up our expectations a bit in the U.S. and even in Europe," she said.
Asian indexes rose on the back of the data. China's Shanghai Composite Index climbed 0.8%, and Japan's Nikkei 225 edged up 0.1%.
While the S&P 500 rose in eight of the past 11 sessions heading into Friday, that masks some of the weakness under the surface, said Frank Cappelleri, the executive director at brokerage Instinet. Tech stocks have lost ground and some of the more speculative trades that drove the market earlier have also faltered.
"The thing the market has been able to do is put on blinders to underperforming areas and let the leaders dictate," he said.
One sign of flagging demand has come in the market for new issues. Shares of Coinbase Global rose 31% in their first day of trading on Wednesday, but that was marked against their reference price. The stock is down from its opening trading price of $381, trading Friday around $338. On Thursday, shares of AppLovin fell 19% and TuSimple fell 4% on their first day of trading.
Meanwhile, comments from the Securities and Exchange Commission concerning one of the hottest bets on Wall Street, the special-purpose acquisition companies, has resulted in a slowdown in new SPAC issues and lower prices.
Among other movers in the U.S., PPG Industries rose 11% after the paint manufacturer said improving industrial demand would boost profits in the current quarter. DraftKings shares climbed 1.4% after it was named an official sports betting partner of the NFL.
J.B. Hunt Transport Services, considered a transportation bellwether, gained 42.8% on higher profits and revenue for the first quarter. Meantime, Alcoa said it expected strong results in the second quarter, lifting the aluminum maker's shares 7.7%.
Overseas, the Stoxx Europe 600 rose 0.8%, led by shares of banks and makers of cars and car parts. Daimler gained 2.7% after the German auto maker said sales of Mercedes-Benz cars would push first-quarter results above analysts' forecasts.
Shares of Bank of Ireland jumped about 8.6%. The lender said it had agreed potentially to buy all of KBC Bank Ireland's performing loans. German meal-kit maker HelloFresh climbed 2.2% after raising its revenue guidance for 2021.
The yield on 10-year Treasury notes rose to 1.571%, up from 1.531% Thursday but still down from 1.664% at the end of last week. Yields move in the opposite direction to bond prices. Rising yields injected volatility into the stock market in the first quarter by knocking shares of large technology companies.
Daniel Morris, chief market strategist at BNP Paribas Asset Management, said falling yields call into question some aspects of the "reflation trade," in which investors bought stocks that stood to gain from a burst of inflation and economic activity.
Yields have fallen because the Federal Reserve has started to convince investors that it won't bump up interest rates to ward off higher inflation, Mr. Morris said. "The Fed's been messaging this for a while but the market finally seems to be believing it."
Other investors, such as Ms. Olu-Pitan, say yields have fallen because overseas money managers, especially in Japan, have made large purchases of U.S. government debt.
Paul Vigna contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires