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U.S. stocks rallied, driving the S&P 500 to a near-record closing high. The Dow Jones Industrial Average rose 0.67% to 34,043.49 and the S&P 500 gained 1.09% at 4,180.17, just below its previous closing high of 4,185.47 on April 16. The Nasdaq Composite added 1.44% at 14,016.81.

Expectations for company results have steadily gained in recent weeks as opposed to a typical decline as earnings season approaches. First-quarter earnings are expected to jump 33.9% from a year ago, the highest quarterly rate since the fourth quarter of 2010. Factory data and new home sales underscored a booming economy while mega cap stocks rose in anticipation of strong earnings reports next week.

As the three major Wall Street indexes surged, the CBOE market volatility or “fear” index plunged almost 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. Yields have come back down, which is very positive for tech.

Earnings take centre stage next week when 40% of the S&P 500’s market cap report on Tuesday through Thursday, including the tech and related heavyweights of Microsoft Corp, Google parent Alphabet Inc, Apple Inc and Facebook Inc. Those names, including Inc, supplied the biggest upside to a broad-based rally in which advancing shares easily outpaced decliners. The S&P 500 posted 81 new 52-week highs and no new lows; the Nasdaq Composite recorded 111 new highs and 20 new lows. All the 11 major S&P 500 sectors were higher, with technology and financials leading gains.

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.

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.

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