* Stocks surge on strong outlook for earnings, economy
* Honeywell down on aerospace unit revenue miss
* Pinterest up as Credit Suisse raises price target
April 23 (Reuters) - U.S. stocks rallied on Friday, driving
the S&P 500 to a near-record closing high, after factory
data and new home sales underscored a booming economy while big
tech stocks rose in anticipation of strong earnings reports next
The bounceback follows a sell-off on Thursday when reports
that U.S. President Joe Biden plans to almost double the capital
gains tax spooked investors. Analysts dismissed the slide as a
knee-jerk reaction and pointed to the strong outlook.
As the three major Wall Street indexes surged, the CBOE
market volatility or "fear" index plunged about 10% in a
sign of tumbling investor anxiety about the risks ahead.
Companies are providing guidance after staying quiet during
the pandemic, while lower bond yields and results that beat
estimates are driving the rally, said Tim Ghriskey, chief
investment strategist at Inverness Counsel in New York.
"There is a lot of anticipation of what's to come," he said.
"We've seen actual reports beating these very high expectations.
Yields have come back down, which is very positive for tech."
Earnings take center stage next week when 40% of the S&P
500's market cap report on Tuesday through Thursday, including
the tech heavyweights of Microsoft Corp, Google parent
Alphabet Inc, Apple Inc and Facebook Inc
Those names, including Amazon.com Inc, supplied the
biggest upside to a rally in which advancing shares easily
First-quarter earnings are expected to jump 33.9% from a
year ago, the highest quarterly rate since the fourth quarter of
2010, according to IBES Refinitiv data.
U.S. factory activity powered ahead in early April. IHS
Markit's flash U.S. manufacturing PMI increased to 60.6 in the
first half of this month, the highest reading since the series
started in May 2007.
In another sign of strong consumer demand, sales of new U.S.
single-family homes rebounded more than expected in March,
likely boosted by an acute shortage of previously owned houses
on the market.
All the 11 major S&P 500 sectors were higher, with
technology and financials leading gains.
Ron Temple, head of U.S. equity at Lazard Asset Management,
said the U.S. economy is about to post the strongest growth in
50 years, with more than 6% gains both this year and next.
The Federal Reserve will allow the economy to run hotter
than in the past, adding to the high-growth outlook.
"Investors are gradually coming around to the sheer
magnitude of excess savings, pent-up demand and the implications
of such a massive wave of fiscal stimulus," Temple said.
Unofficially, the Dow Jones Industrial Average rose
0.66% to 34,040.28 and the S&P 500 gained 1.08% to
4,179.73. The Nasdaq Composite added 1.43% to 14,016.06.
Some earnings reports on Friday were lackluster, with
American Express Co sliding after reporting a slump in
credit spending and lower quarterly revenue.
Honeywell International fell after missing revenue
expectations in aerospace, its biggest business segment.
Naked Brand Group jumped after shareholders
approved the proposed divestiture of the company's Bendon
Image sharing company Pinterest Inc gained as
Credit Suisse raised its price target, saying newer product
offerings and expanding footprint in markets abroad will yield
higher revenue and user growth.
(Reporting by Herbert Lash; Additional reporting by Shivani
Kumaresan and Shreyashi Sanyal in Bengaluru; Editing by Sriraj
Kalluvila, Arun Koyyur and Richard Chang)