Stocks have their best quarter in a decade; Lyft jumps in its debut

U.S. stocks finished broadly higher Friday as the benchmark Standard & Poor’s 500 index closed out its best quarter in nearly a decade.

The S&P 500 is now up 13.1% this year, a drastic turnaround for stocks after a jarring 14% sell-off in the last three months of 2018.

The market’s blockbuster quarter shared the spotlight with Lyft’s much-anticipated trading debut on the Nasdaq stock exchange. The ride-hailing company’s shares finished at $78.29, or 8.7% above its offering price of $72.

New data pointing to lower inflation, plus renewed investor optimism that the U.S.-China trade talks are making progress, helped drive the rally. Bond yields also continued to rise from recent lows, easing concerns about a steep drop in long-term yields heading into this week.

“Low interest rates, low inflation, possibly better trade — that’s enough here to move the market higher,” said Mike Baele, senior portfolio manager at U.S. Bank Wealth Management. “It’s been some time since we’ve had some enthusiasm in the IPO market, and that might be helping the markets today as well.”

The S&P 500 index rose 18.96 points, or 0.7%, on Friday to 2,834.40. The index also notched a gain for the week.

The Dow Jones industrial average climbed 211.22 points, or 0.8%, to 25,928.68. The Nasdaq composite climbed 60.16 points, or 0.8%, to 7,729.32. The Russell 2000 index of smaller-company stocks ticked up 4.63 points, or 0.3%, to 1,539.74.

The Dow ended the quarter with an 11.2% gain, while the Nasdaq is up 16.5%. The Russell 2000 has climbed 14.2%.

The U.S. stock market rebounded strongly in the first quarter after closing out 2018 with a steep sell-off. The S&P 500’s technology sector powered much of those gains, climbing 19.3% over the last three months.

The Federal Reserve sparked the rebound by announcing a more patient approach to further interest rate hikes. The announcement reassured investors, who had worried that the Fed would continue to raise rates amid signs of a slowing global economy.

“As disappointing and perhaps shocking as the sell-off in the fourth quarter was, with the Fed getting out of the way the rebound has been equally as shocking,” Baele said. “Essentially, we’re just back to where we were in October.”

The first quarter’s strength helped prolong the bull market for U.S. stocks, which marked its 10th anniversary this month and is now the longest ever.

The last time the S&P 500 index had a better quarterly performance was the third quarter of 2009, when it climbed about 15%.

Friday’s gains followed a broad rally in global stocks as investors hoped for progress in U.S.-China trade talks. U.S. Treasury Secretary Steven Mnuchin called the talks “constructive” and said in a tweet Friday that he looked forward to continuing them in Washington next week.

Officials from the world’s two biggest economies are aiming to put to rest a dispute over technology and other issues. Chinese Vice Premier Liu He is expected to travel to Washington next week.

Bond yields rose for the second consecutive day, allaying traders’ concerns following a steep drop in long-term yields over the past week. The yield on the benchmark 10-year Treasury note rose to 2.40% from Thursday’s 2.39%.

Investors remain anxious about the slowing global economy. Economists believe growth has slowed this year due to weaker growth prospects in China and Europe, the dampening effects on U.S. exports from the Trump administration’s trade battles and the waning boost from the 2017 tax cut and government spending.

The more downbeat outlook for economic growth has prompted the Federal Reserve to signal that it plans to keep its benchmark interest rate on hold this year.

Lyft’s stock-market debut marked the first time a U.S. ride-hailing company sold shares to the public.

Investors clamored to get in on the action in the days leading up to the IPO, despite the company’s history of losses. That prompted Lyft to raise its target price to $72 per share from an initial range of $62 to $68.

Traders’ enthusiasm boosted Lyft’s shares 20% above their offering price in the first few minutes after they began trading. They gave back some of that sharp gain and ended up 8.7%.

Technology and healthcare companies drove much of the market’s gains Friday. Micron Technology rose 5.1%. Celgene jumped 7.9%.

Industrial firms notched solid gains as several airlines climbed. American Airlines Group rose 2.8%, Southwest Airlines rose 2.9%, and Delta Air Lines rose 2.6%.

Among the biggest movers Friday were companies that issued their latest quarterly report cards.

CarMax led all stocks in the S&P 500 with a gain of 9.6% after the auto dealership chain’s fourth-quarter earnings topped Wall Street’s forecasts, even as revenue fell short of expectations.

RH, which owns furniture chain Restoration Hardware, slumped 22% after it reported disappointing fourth-quarter revenue. RH’s fiscal 2019 outlook also fell well below analyst expectations.

Energy futures closed mostly higher. Benchmark U.S. crude rose 1.4% to settle at $60.14 a barrel. Brent crude, used to price international oils, rose 0.8% to $68.39 a barrel.

Wholesale gasoline rose 0.8% to $1.90 a gallon. Heating oil ticked up 0.1% to $1.97 a gallon. Natural gas slid 1.8% to $2.66 per 1,000 cubic feet.

Gold rose 0.2% to $1,298.50 an ounce. Silver rose 0.9% to $15.11 an ounce. Copper climbed 2.2% to $2.94 a pound.

The dollar rose to 110.80 yen from 110.58 yen. The euro weakened to $1.1214 from $1.1226.

The British pound fell to $1.3003 from $1.3059 after — for the third time — lawmakers rejected Prime Minister Theresa May’s plan to leave the European Union. Britain now has until April 12 to tell the EU what it plans to do next. It must cancel Brexit, seek a longer delay or crash out of the bloc without a deal.