Markets: News  

The S&P 500 rallied 2.4% on Friday, bouncing from an oversold condition and closing back above the psychological 4,000 level. The Nasdaq Composite (+3.8%) and Russell 2000 (+3.1%) outperformed with gains over 3.0% while the Dow Jones Industrial Average rose 1.5%. It was a risk-on day from the get-go, starting from strong showings in foreign equity markets and continuing into the close of U.S. markets. All 11 S&P 500 sectors finished higher with gains ranging from 1.1% (utilities and health care) to 4.1% (consumer discretionary), with individual leadership belonging to the battered mega-cap stocks. Presumably, risk sentiment was aided by a recognition that the S&P 500 was able to push higher after nearly entering bear market territory yesterday, as well as the ability for the market to sustain an early rally effort. News factors that supported cause were reports from Bloomberg indicating that Shanghai was aiming to have no community spread of COVID-19 by May 20, spurring hopes for a relaxation of restrictions this month, and that Beijing refuted rumors of potential COVID-related lockdowns. Crude futures rose 3.7%, or $3.92, to $110.32/bbl amid improved demand expectations. Short-covering activity, meanwhile, was evident in the post-earnings pops in Affirm Holdings (AFRM 23.71, +5.67, +31.4%) and Duolingo (DUOL 89.77, +22.79, +34.0%), and the outsized gain in Robinhood Markets (HOOD 10.69, +2.13, +24.9%) on news that Emergent Fidelity disclosed a 7.6% active stake in the company.The bullish price action contributed to a 9% decline in the CBOE Volatility Index (28.87, -2.80, -9.1%), reflecting reduced hedging interest, and declines in safe-haven assets like Treasuries, gold ($1,808.30/ozt, -$15.40, +0.8%), and the U.S. dollar (104.57, -0.28, -0.3%).Selling interest in Treasuries pushed yields higher: the 2-yr yield rose eight basis points to 2.59%, and the 10-yr yield rose 12 basis points to 2.94%.In Fedspeak, Fed Chair Powell and Cleveland Fed President Mester (FOMC voter) both reiterated support for 50-basis-point rate hikes in the next two meetings after seeing this week's inflation data. On a related note, hopes for peak inflation were reinforced today by a flat m/m change in import prices for April and by downwardly revised export prices for March (to 4.1% from 4.5%). Separately, Twitter (TWTR 40.70, -4.38, -9.7%) shares fell about 10% amid growing doubts about Elon Musk's takeover of the company. Mr. Musk tweeted that the deal was temporarily on hold following recent analysis that showed spam/fake accounts represented less than 5% of Twitter users -- less than his expectations -- but later said that he was still committed to the deal. Reviewing Friday's economic data: The preliminary University of Michigan Index of Consumer Sentiment for May dropped to 59.1 (Briefing.com consensus 63.5) from the final reading of 65.2 for April. In the same period a year ago, the index stood at 82.9.The key takeaway from the report is that the decline in sentiment was broad-based across income, age, education, geography, and political affiliation with inflation factoring prominently in consumers' assessment of their current financial situation.Import prices were flat in April after increasing 2.9% in March. Excluding oil, import prices rose 0.4% after increasing 1.2% in March. Export prices rose 0.6% after increasing 4.1% in March. Excluding agriculture, export prices also rose 0.5% after increasing 4.1% in March.Looking ahead, investors will receive the Empire State Manufacturing Survey for May and Net Long-term TIC Flows for March on Monday. Dow Jones Industrial Average -11.4 YTDS&P 500 -15.6% YTDRussell 2000 -20.2% YTDNasdaq Composite -24.5% YTD