Stocks Rise, Poised for Strong Weekly Gains

The S&P 500 is on pace to advance 5.6% this week, while the Dow Jones Industrial Average is up 4.9% in that time. The Nasdaq Composite has climbed 7.5%. All three indexes are on pace for their best weekly performance since early November 2020.

Investors are showing more enthusiasm for U.S. stocks after two weeks of declines for the S&P 500 and five weeks of losses by the Dow Jones Industrial Average. They say the strong fundamentals of many U.S. companies will allow them to deliver profits in the face of higher costs and growing geopolitical uncertainty. Many believe the strong U.S. labor market will help consumers keep the economy growing.

Analysts also pointed to a positive tone from the U.S. central bank, where officials this week voted to lift interest rates in an effort to slow inflation. Fed Chairman

Jerome Powell

cited strong household balance sheets and consumer demand to deflect worries about the potential for a recession in the next year.

“The U.S. economy is on a really solid foundation right now, and it’s a key reason why the Fed is feeling comfortable in moving forward with their tightening process without potentially putting the U.S. in a recessionary type of environment,” said

Jeff Schulze,

investment strategist at ClearBridge Investments.

Stocks mostly traded higher Friday. The S&P 500 rose 0.6%, while the Nasdaq Composite advanced 1.4%, continuing to claw back its recent losses. The blue-chip Dow industrials added 0.2%, or about 83 points.

Oil prices hovered Friday below their levels of the end of last week and considerably lower than the highs seen earlier in March. Brent crude, the global oil benchmark, recently traded at $107.53 a barrel, down from a settle price of $112.67 last Friday. Earlier that week oil at times traded above $130 a barrel.

Russia’s invasion of Ukraine drove oil prices above $100 a barrel for the first time since 2014 as investors bet on disruptions to resource exports from the region. The jump in energy costs has heightened concerns about inflation, which was already at a 40-year high in the U.S.

Traders remain concerned about lower oil supplies due to longer-term sanctions on Russia amid signs that the conflict may drag on. Russian and U.S. officials said Thursday that talks between Moscow and Kyiv on a cease-fire hadn’t yielded progress.

“Sentiment remains fragile, and the risk of further escalation remains a real concern despite the gains of the last two weeks,” said

Michael Hewson,

chief markets analyst at CMC Markets.

The yield on the benchmark 10-year U.S. Treasury note fell to 2.153% Friday from 2.192% on Thursday, reversing direction after four straight days of rises. Yields fall as prices rise.

Among individual stocks,

FedEx

fell 4.9% after it reported lower shipping volumes and said profit margins were coming under pressure.

In economic news, U.S. existing-home sales fell 7.2% in February, the National Association of Realtors said Friday, while February sales fell 2.4% from a year earlier. The average rate for a 30-year fixed mortgage recently topped 4% for the first time since 2019.

Overseas, the pan-continental Stoxx Europe 600 added 0.9% Friday to end the week with a gain of 5.4%, its best week since November 2020. 

The Russian stock market remained closed. The country’s central bank hasn’t yet said if it will open next week. The central bank kept its key policy rate steady at 20%. The Russian state avoided default by making coupon payments on dollar-denominated sovereign bonds on Thursday. 

“Markets were positioned for a technical default of Russia, people were surprised,” said

Ludovic Subran,

chief economist at Allianz.

In Asia, most major benchmarks rose. Chinese stocks were mixed, with the Shanghai Composite Index rising for the third consecutive trading session and extending the momentum catalyzed by policy makers in Beijing signaling support for capital markets earlier in the week. Hong Kong’s Hang Seng Index slid 0.4% on Friday but still closed more than 4% higher for the week. 

Write to Karen Langley at karen.langley@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com

Corrections & Amplifications
European stocks began trading at 4 a.m. ET. An earlier version of this article mistakenly described moves as of Thursday’s close as having taken place Friday morning.