The US markets ended higher on Friday supported by data indicating an acceleration in economic activity and even faster growth in new home sales, as investors largely brushed off Thursday’s reports that President Joe Biden would propose a large increase on the capital-gains tax for the wealthiest Americans. Optimism about the economic recovery also helped prop up the markets, although concerns about high valuations and surging coronavirus cases overseas have led to worries about the near-term outlook.
In US economic data, the IHS Markit purchasing managers index for the manufacturing sector rose to a record 60.5 in April from 59.1 a month earlier, while the services sector PMI jumped to 63.1 from 60.4. A reading of more than 50 indicates an expansion in activity. Besides, the Commerce Department released a report showing a substantial rebound in new home sales in the month of March. The report showed new home sales skyrocketed by 20.7 percent to an annual rate of 1.021 million in March after plunging by 16.2 percent to a revised rate of 846,000 in February. Street had expected new home sales to spike by 14.3 percent to a rate of 886,000 from the 775,000 originally reported for the previous month. With the rebound, new home sales soared from the eight-month low set in February to their highest level since August of 2006.
Meanwhile, the Federal Reserve's monetary policy announcement is likely to be in the spotlight next week, although the central bank is widely expected to maintain its ultra-easy monetary policy. Traders are likely to pay close attention to any changes to the Fed's statement that may signal a shift in policy in the near future. Reports on durable goods orders, consumer confidence and personal income and spending may also attract attention along with the preliminary reading on first quarter GDP.
Dow Jones Industrial Average surged 227.59 points or 0.67 percent to 34,043.49, Nasdaq gained 198.40 points or 1.44 percent to 14,016.81 and S&P 500 was up by 45.19 points or 1.09 percent to 4,180.17.