U.S. stocks rose Friday, reversing losses from earlier in the week as changing expectations about when the Federal Reserve will next raise interest rates dominated trading.
For the week, the Dow industrials slipped 0.2%, marking its fourth week in a row of declines, while the S&P 500 rose 0.3% after three consecutive weeks of losses. Major indexes have largely been unable to make significant moves higher or lower in the past month.
On Friday, the Dow Jones Industrial Average rose 65.54 points, or 0.4%, to 17500.94. The S&P 500 gained 12.28 points, or 0.6%, to 2052.32. Both indexes are up 0.4% so far this year.
The Nasdaq Composite climbed 57.03, or 1.2%, to 4769.56 Friday, rising 1.1% this week after four weeks of losses. The index is down 4.8% so far this year.
Oil jumped 3.3% in the past week to $47.75 a barrel, lifting shares of oil and gas companies and making energy the best-performing sector in the S&P 500.
Bank stocks also jumped. The KBW Nasdaq Bank index gained 4.2% this week as investors settled into heightened expectations that the Federal Reserve will raise interest rates this summer. A rise in interest rates can boost earnings at banks because they can increase the gap between what banks charge on loans and what they pay on deposits.
“The Fed has affected the market the last three days but everyone’s realigning themselves today,” said Tom Carter, managing director at brokerage JonesTrading. “People who have been sitting on the sidelines are now fleshing out their game plans,” he said.
Minutes from the Fed’s April meeting, released Wednesday, showed that an interest-rate increase is in play for June’s policy meeting if the economy keeps improving.
“What the Fed said on Wednesday, that turned everything on its head. The Wednesday statement came completely out of the blue and now people are trying to figure out if this is a good or bad thing,” said Kent Engelke, chief economic strategist at Capitol Securities Management.
The yield on the 10-year Treasury note rose to 1.849% this week from 1.705% last Friday—its largest one-week yield gain since early November.
Fed-fund futures, used by investors and traders to bet on central-bank policy, showed a 30% likelihood of a rate increase at the Fed’s June policy meeting and a 55% likelihood of a rate rise in July, according to data from CME Group, a steep rise from the start of the week.
Technology stocks led the S&P 500 higher Friday with a 1.2% gain, and remain up 1.5% month to date, the only sector in positive territory in May.
First-quarter corporate earnings results and guidance have been gloomy even as many companies beat analysts’ lowered earnings expectations, dampening investor enthusiasm for stocks.
With 95% of companies in the S&P 500 having reported quarterly results, earnings are on pace to decline 6.8% from a year earlier, according to FactSet. That is less than the 8.5% analysts expected heading into the quarter, but also marks the index’s first four-quarter streak of declines since the financial crisis.
Shares of Applied Materials,
a chip-making equipment manufacturer, rose 2.75, or 14%, to 22.66 after the company reported late Thursday that orders have hit a 15-year high, in part because of greater demand from Chinese customers.
The Stoxx Europe 600 rose 1.2%, bolstered by a strong trading session in Asia. The index rose 1% for the week.
Japan’s Nikkei Stock Average rose 0.5% Friday and 2% for the week. The Shanghai Composite Index ended the day 0.7% higher, but still concluded its fifth consecutive week of declines.
—Daniel Huang contributed to this article.