Why has the stock market risen? China’s GDP was strong and rates rose.

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Shares rose to the high of two key developments on Friday, boosting investor confidence in the economy.

The

Dow Jones Industrial Average

increased by 164.68 points, or 0.48%, to close at 34,200.67, and the

S&P 500

added 15.05 points, or 0.36%, to finish at 4,185.47; both indices carved the closing records. The

Nasdaq Compound

scored at 13.58 points, or 0.10%, to close at 14,052.34. The biggest gain in the S&P 500 was chemicals

PPG Industries

(ticker: PPG), which rose shares by 8.9% on strong earnings.

Pfizer

(PFE) CEO Albert Bourla said patients who have been fully vaccinated are likely to need annual shots to protect against new strains of Covid-19. He compared the virus and its required shots to flu. This hint of confidence in Pfizer’s ability to protect people against the virus gives investors the confidence that the virus can be kept at a distance, that reopening can remain intact and that the trajectory of the economy will remain upward. Pfizer share rose 2.5%.

Another positive factor: China’s gross domestic product growth for the first quarter of the year rose to 18.3%, the fastest pace ever, although it missed estimates of 19.2%. However, the latest figure reflects that the economy is recovering more than sharply. It offers good benefits for global economic growth in general, but it can also be interpreted as an encouraging signal on US economic demand as the US imports in bulk from China.

The internal movements of the stock market confirmed the optimism; value stocks – which represent mature companies in their earnings price – were the best performers. The

Vanguard S&P 500 Value

ETF (FET) increased by 0.6% and beat it

growth counterpart

(GUARDIAN), which increased by 0.2%. Growth companies, betting on a longer time frame for full profitability, are less sensitive than the current situation in the current economy.

Value’s better performance on Friday was also helped by a setback of ten years. Higher long-term returns, which undermine the value of future cash flows, put great pressure on the current valuations of growth companies.

“Yesterday’s drop in 10-year yields is not sustainable,” Sevens Report Research founder Tom Essaye wrote in a Friday note.

Yields fell to 1.55% on Thursday after hitting 1.74% in mid-March, but it’s not surprising to see a Friday setback to 1.58%; the yield is still below the expected long-term inflation rate and is historically often above inflation.

We’ll see if the optimism lasts the weekend until Monday.

Write to Jacob Sonenshine by [email protected]