The Dow racked up gains Friday, as late flourish of buying pressure lifted broader market to notch a weekly win, with energy and technology leading the charge.
The Dow Jones Industrial Average rose 1.39%, or 452 points, the Nasdaq Composite was up 1.24%, the S&P 500 was up 1.67%.
Energy stocks racked up gains as oil prices rose 4% over the ongoing Suez Canal saga that some estimate is disrupting hundreds of thousands of barrels a day from being transported via the key shipping route.
More than 600,000 barrels a day of Middle East oil destined for the U.S. and Europe and about 850,000 barrels of crude to Asia are transported though the Suez, according to ACM Shipbroker.
While the boost to oil prices from transport disruptions will be temporary, Wall Street continues to suggest that oil prices will head higher as major oil producing countries will refrain from ramping up production too quickly.
"[W]e expect a slower ramp-up in OPEC+ production this spring to help offset both slower EM and EU demand recovery and higher Iranian exports, with global demand still set to increase sharply through the summer," Goldman Sachs (NYSE:GS) said.
Financials also participated in the broader market rally following a bid in banks after the Federal Reserve gave banks the green light to resume dividends and stock buybacks after June 30.
Cyclicals were unfazed by weaker-expected-expected consumer spending February, with economists quick to point out weather-related noise -following the cold snap last month – in the data, and reiterated the expected boost to spending from stimulus.
Broadcom (NASDAQ:AVGO), NXP Semiconductors (NASDAQ:NXPI), and Qorvo (NASDAQ:QRVO) led the rally in chip stocks.
"We expect an additional stimulus package passed in March to raise the savings rate again, adding to a powerful tailwind of buying power that has been building among US households – ready to be deployed as the economy is reopening," Morgan Stanley (NYSE:MS) said.
The likely wave of consumer spending to come will boost inflationary pressures, with the latest data showing the price consumer expenditure index, the Fed's preferred measure of inflation, rose to 1.6% in February year-on-year from 1.4% the prior month. That is still short of the Fed's 2% target, but analysts see further room for an acceleration in price pressures.
"We continue to see core PCE inflation peaking in April and May this year closer to 2.6%," Morgan Stanley added.
The United States 10-Year yields topped 1.65%, though that did little to curb investor appetite for the growth trade, with tech stocks pushed higher by a rally in chip stocks.
The communications services sector, however, ended lower following a slump in Discovery (NASDAQ:DISCA), ViacomCBS (NASDAQ:VIAC) and Fox Corp (NASDAQ:FOXA).
Fox Corp. fell 6% after Dominion Voting System filed a $1.6 billion defamation lawsuit against Fox News Network for accusing the company of rigging the 2020 presidential election.
In other news, Nio Class A ADR (NYSE:NIO) cut some losses to end down less than 5% after halting production at one of its plants, citing impact from the global chip shortage.
The Chinese electric vehicle company cut its Q1 delivery target to about 19,500 vehicles, from a previous range of 20,000 to 20,500 vehicles.