U.S. stocks rallied the most in seven weeks on the back of strong earnings, continuing a stretch of volatility that’s gripped markets virtually all year.

Tech shares plunged in late trading after Amazon.com Inc.’s results sent its shares down 10 per cent. Intel Corp. lost 5 per cent on a weak sales forecast. Apple Inc. is also set to report.

The S&P 500 surged more than 2 per cent in the cash session for its best day since March 9, while the Nasdaq 100’s advance topped 3 per cent. Meta Platforms Inc. surged 18 per cent in the biggest rally since 2013 after Facebook added more users than anticipated. PayPal Holdings Inc. rose 11 per cent on a sales beat, Qualcomm Inc. led U.S. chip stocks higher, and Twitter Inc. missed revenue estimates, reflecting a slowdown in advertising. 

The rally came as investors saw evidence of solid consumer demand masked by the surprise contraction in economic growth last quarter, the first pullback since 2020. The gain left the S&P 500 higher for the week, though it remains down more than 5 per cent in April, on track for the worst month since the pandemic bear market. Volatility has been a persistent feature in markets all year, with investors on edge over China’s struggle to suppress COVID, Russia’s war in Ukraine and worries that central-bank tightening may tip the U.S. economy into a recession.

“We’ve corrected a lot in a very short period of time and given the oversold levels, if we continue to have better-than-feared earnings, I think we can be poised for a bounce,” Anastasia Amoroso, chief investment strategist at iCapital, said in a interview. “The problem is: how long is this bounce going to last?”

Roughly 50 per cent of the S&P 500’s market capitalization has reported earnings, with 76 per cent of firms topping projections, according to Credit Suisse. “The earnings season overall has delivered more good news than bad, and could help shift investors focus from the macro headwinds that have battered the major indexes this month,” said Art Hogan, chief market strategist at National Securities. 

Yet, a contraction in gross domestic product data could complicate efforts to combat inflation as a ballooning trade deficit and softer inventory growth is undercutting an otherwise solid consumer and business demand picture.

It’s “not a strong departure point for the real economy that will be facing a far tighter monetary policy backdrop as the Fed proceeds with rate hikes,” BMO’s Ian Lyngen wrote of the first-quarter GDP print. “The Fed has only delivered a single 25 bp hike.”

Treasuries reversed losses, with the yield on the 10-year benchmark little changed. Oil prices rose to trade over US$105 a barrel. And in currency markets, the yen’s plunge to a 20-year low could signal a rewrite of the global currency playbook. The offshore yuan sank, the euro retreated along with the pound, and the ICE dollar index hit a two-decade high.

The Nasdaq’s average daily move over the last 100 trading days reached close to 1.6 per cent, the highest such reading since the early days of the pandemic, according to Bespoke Investment Group. There have only been four other periods that averaged such daily volatility -- besides the pandemic, they include the dot-com bust, the 2008 crisis and 2011. “Volatility like we have seen in the last four months doesn’t come around very often,” Bespoke strategists wrote in a note.

In Europe, natural gas prices declined following two days of gains as buyers considered options to keep getting supply from Russia without violating sanctions. European Union members are pushing the bloc to deliver clearer guidance over Russia’s demand for payments in rubles, and Germany has signaled it’s open to a phased-in ban on Russian oil imports.

Events to watch this week:

• Tech earnings include Amazon, Apple
• EIA oil inventory report, Wednesday
• U.S. 1Q GDP, weekly jobless claims, Thursday
• ECB publishes its economic bulletin, Thursday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 2.5 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 3.5 per cent
• The Dow Jones Industrial Average rose 1.8 per cent
• The MSCI World index rose 1.9 per cent

Currencies

• The Bloomberg Dollar Spot Index rose 0.6 per cent
• The euro fell 0.5 per cent to US$1.0508
• The British pound fell 0.6 per cent to US$1.2465
• The Japanese yen fell 1.9 per cent to 130.89 per dollar

Bonds

• The yield on 10-year Treasuries was little changed at 2.84 per cent
• Germany’s 10-year yield advanced 10 basis points to 0.90 per cent
• Britain’s 10-year yield advanced six basis points to 1.88 per cent

Commodities

• West Texas Intermediate crude rose 3.4 per cent to US$105.45 a barrel
• Gold futures rose 0.4 per cent to US$1,896.60 an ounce